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“That men may rightfully be compelled to submit to, and support, a government that they do not want…No principle … can be more self-evidently false than this; or more self-evidently fatal to all political freedom … a man, thus subjected to a government that he does not want, is a slave. And there is no difference, in principle — but only in degree — between political and chattel slavery. The former, no less than the latter, denies a man's ownership of himself and the products of his labor; and asserts that other men may own him, and dispose of him and his property, for their uses, and at their pleasure.”     Lysander Spooner

January 7, 2009

Eliot Spitzer on Transformation and Stimulation

by Quincy

Former New York Governor Eliot Spitzer gives us a look at the kind of stimulation he would give the economy in Slate:

The incoming Obama administration and Congress are planning a huge fiscal stimulus package. They hope that such a stimulus will catalyze an economic turnaround and be a cornerstone of a “New New Deal.”

[...]

Here is where the New Deal analogies are instructive. The New Deal probably didn’t pull us out of the Depression; World War II did that. What the New Deal did was redefine the social contract—perhaps just as important an outcome. The ultimate significance of the Obama package may be not its short-term demand-side impact but rather its capacity to transform our economy and, in turn, some of the fundamental underpinnings of our society. This introduces the second major problem: The “off the shelf” infrastructure projects that can be funded immediately and provide immediate demand-side stimulus are almost by definition not the transformative investments we really need. Paving roads, repairing bridges that need refurbishing, and accelerating existing projects are all good and necessary, but not transformative. These projects by and large are building or patching the same economy with the same flaws that got us where we are. Our concern should be that as we look for the next great infrastructure project to transform our economy, we might rebuild the Erie Canal and find ourselves a century behind technologically.

So Spitzer thinks the economy needs to be transformed into something better. Does he propose that we forge ahead in an environment that allows the free market and the awesome intelligence of millions of American citizens to find the way forward? No. He proposes that government picks winners and losers in the new economy. Here is perhaps the most idiotic example:

Second, the most significant hurdle to beginning the shift to nongasoline-based cars is the lack of an infrastructure to distribute the alternative energy, whether it is electricity—plug-in hybrids—or natural gas or even hydrogen. Once that infrastructure is there, it is said, consumers will be able to opt for the new technology. If that is so, let us build that infrastructure now: Transform existing gas stations so they can serve as distribution points for natural gas or hydrogen, build plug-in charging centers at parking lots, and design units for at-home garages. These would, indeed, be transformative investments.

Where should the debunkulating begin? First, gas stations are private property. It’s rather hard to transform private property in a government program without being thuggish about it.

Second, massive deployments of immature technology hamper genuine progress. Building out a massive electric car infrastructure based on current battery technology would be an environmental and economic disaster. Today’s batteries are not only inefficient, they are harmful to the environment to produce and dispose of. They also are not suitable as a replacement to gasoline as an energy storage medium for cars because of weight, charging time, and energy leakage over time.

Ultracapacitors, on the other hand, are suitable for automotive use. EEStor has just patented a capacitor that provides the same performance as a Tesla roadster battery while weighing one-third as much and having a charging time of seconds when enough power is available. They also require a different charging system for the full benefit of the technology to be realized.

Instead of enabling a greener, high-tech future, Spitzer’s transformative plan would put it farther out of reach. This consequence is not peculiar to Eliot Spitzer planning the economy, of course. It comes with all forms of centralized economic planning. No human is intelligent enough to make efficient economic decisions for large groups of people. The amount of information and understanding needed to pick technologies that will most efficiently meet the needs of people who will use them is staggering. Not only must all the technologies be thoroughly understood, but so do the needs of the people who will be using them.

The free market solves this problem by changing the scope of the decision. Instead of trying to figure out the needs of millions and picking one technology, a free market offers several technologies and allows buyers to consider only their own needs. While not everyone buying technology thoroughly understands what they’re buying, they do know what they want out of it. Sometimes this leads to a clear winner, while other times it leads to a continued selection of technologies. Eventually, dissatisfaction with the choices allows a new idea to take hold.

This process is vital to the continued health of the economy, yet interfering with it is exactly how Spitzer, Obama, and the left want to stimulate the economy. Thanks, Mr. Spitzer, but what you’re offering is stimulation we don’t need.


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13 Comments

  1. It’s hard to know where to start in correcting all the fiction that flows out of Spitzer’s mouth. WWII did NOT end the Depression, which was longer and depper than that in any other country, thanks to the idiocies of the New deal (which, among other things, established monopolies in order to keep prices HIGH(!!!!!!). Those New Deal brainless boobs thought that “overproduction” had caused the Great Depresssion. The Depression ended
    in late 1946. No additional jobs were added during WWII – those millions of unemployed men and women simply exchanged unemploment for a uniform.
    The obstacle to electric cars has NOTHING to do with a lack of infrastruture. Perhaps Spitzer is unaware that the infrastructure for electric devices has existed for 100 years now.
    It’s called the electric utility grid.
    Electricity from the home is plenty enough to enable a gigantic reduction in oil demand for transportation – cars could eliminate over 90%
    with a mere 40 mile range Chevy Volt. The real obstacle to PRACTICAL and competitive electric cars is the battery. Until a cheap, fast charging
    one shows up, extended range gasoline motors will be required to provide lots of electric driving, but still allow trips. But that technology is not really yet competitivbe price-wise and therefore will be somewhat limited to upper income folks.
    See what happens when you let a lawyer and politician provide opinions about technology?

    Comment by kent beuchert — January 7, 2009 @ 6:34 am
  2. But doesn’t Mr. Spitzer have a history of indulging in costly service using public money, and assuming a happy ending?

    (Terribly sorry. Couldn’t help myself)

    Comment by Akston — January 7, 2009 @ 11:27 am
  3. Akston –

    At least in that case he got exactly what the public paid for.

    Comment by Quincy — January 7, 2009 @ 2:14 pm
  4. “Today’s batteries are not only inefficient, they are harmful to the environment to produce and dispose of.”

    I don’t know where you get your data, but lead acid batteries are the most highly recycled product in the US. Nearly 95% of all lead acid batteries are reused to make new lead acid batteries. That far outstrips recycling of glass or aluminum.

    Now admittedly, newer battery technology – such as NiMH or Lithium ION – don’t have such high recycle values, mainly because the quantities are nowhere near those of lead acid, and it’s not a profitable business to recycle them. This is where government action needs to step in. Incentivizing recycling of NiMH and Lithium Ion batteries should be just as important as getting US manufacturers to start building them.

    Also, so many people act as if the EEStor technology is a real thing. Nobody has actually seen a working EESU, so as far as reality is concerned, that technology doesn’t exist. IF they ACTUALLY produce them, and not just press releases, AND people get their hands on them and put them in actual working vehicles, EEStor is just science fiction. Because of repeated delays in production, nobody is holding their breath anymore. In the meantime, NiMH batteries and Lithium Ion batteries do work, they just are too expensive. For the upcoming Chevy Volt, the biggest component cost is the battery, and it’s only good for 40 miles.

    Another issue with a charging infrastructure is a lack of a charging plug standard. Sure, 110AC household plugs are fine, but the amount of energy you can get through it is too limited to be useful for anything but an overnight charge. For higher power, there still is no set standard. SAE is working on a standard (J1772), but until it is ratified, nobody really wants to invest in installing charging stations that will probably have to be removed and replaced in a year’s time.

    Comment by Eletruk — January 7, 2009 @ 3:02 pm
  5. I don’t know where you get your data, but lead acid batteries are the most highly recycled product in the US. Nearly 95% of all lead acid batteries are reused to make new lead acid batteries.

    There’s a big difference between heavily recycled and environmentally friendly. While lead acid batteries may be the former, they are NOT the latter. Just what happens when Spitzer’s plan goes forward and there’s massive demand for batteries above and beyond recycling capacity? I’d say all the strip mining they’ll have to do in China and other places would qualify as an environmental disaster, wouldn’t you?

    This is where government action needs to step in. Incentivizing recycling of NiMH and Lithium Ion batteries should be just as important as getting US manufacturers to start building them.

    If government has to incentivize it, then it probably is not the best option. Subsidization obscures the true cost of something, lowering the incentive to find better alternatives.

    Also, so many people act as if the EEStor technology is a real thing. Nobody has actually seen a working EESU, so as far as reality is concerned, that technology doesn’t exist. IF they ACTUALLY produce them, and not just press releases, AND people get their hands on them and put them in actual working vehicles, EEStor is just science fiction.

    I wrote the article on the assumption that there was something behind the patent. Assuming it’s true, my point holds. There may also be other technologies coming down the line we don’t know about. Why push for deployment of immature technology on a massive scale, like Spitzer wants to?

    Another issue with a charging infrastructure is a lack of a charging plug standard. Sure, 110AC household plugs are fine, but the amount of energy you can get through it is too limited to be useful for anything but an overnight charge. For higher power, there still is no set standard. SAE is working on a standard (J1772), but until it is ratified, nobody really wants to invest in installing charging stations that will probably have to be removed and replaced in a year’s time.

    Yet more proof this is immature technology not deserving of government support.

    Comment by Quincy — January 7, 2009 @ 3:44 pm
  6. Battery powered cars have indeed been around for 100 years but the issue is actually one of safety. The true hidden costs preventing battery operated cars in mass comes from the fact that in the event of an accident they are death traps to passengers and rescuers alike.

    There is no infrastructure in place to treat injuries from battery leaks due to accidents. They produce noxious gasses and chemical burns. Every single fireman, policeman, EMS worker, doctor and nurse would have to be retrained and equipment developed, produced and maintained to treat people in accidents involving battery powered cars not to mention disruptions to the insurance industry and attendant lawsuits while we work out assignment of liabilities for this whole new technology.

    And by the way – until someone calculates and compares the costs and energy required to mine and produce and transport the minerals needed to produce these batteries as well as disposal there of relative to the internal combustion engines they will replace in the final numbers on how much energy we save – how the heck do we know they will save us energy at all?

    Seriously. Does it not take energy to dig old gas tanks out of the ground and haul them away from the service stations?; to build new power plants and transmission grids?; to dismantle old engine plants and build new ones? to produce new dies and robots? To design and implement new assembly lines? How much more energy to melt lead vs. iron and alloys?

    Comment by persncikety curmudgeon — January 7, 2009 @ 6:47 pm
  7. And by the way – until someone calculates and compares the costs and energy required to mine and produce and transport the minerals needed to produce these batteries as well as disposal there of relative to the internal combustion engines they will replace in the final numbers on how much energy we save – how the heck do we know they will save us energy at all?

    The sheer magnitude of that calculation makes my head spin. It might be so massive that the amount of energy taken to complete it should be factored in.

    Comment by Quincy — January 7, 2009 @ 11:07 pm
  8. The Free Market can and will handle a lot of the transition in any of the shifts away from oil. You have to remember though the free market works on it’s own schedule and that can be painful. If you have a good idea of where you want to go you can encourage change. The Free Market may only look out a quarter or two whereas we should look and 5 or 10 years. The infrastructure for electric cars is here. Look around the room you are sitting in, you’ll electric car refueling stations on each wall. Now you want higher charge speeds then you need more power. Most people will charge overnight in the homes and be happy with it. Whether we have lithium-ions or ultra-caps who knows, I am hoping EESTOR is it though. But we have to understand government has been picking winners and losers a VERY LONG time. the next time you step onto a Boeing Jet remeber it was the KC-135 that made the 707 successful and built the US passenger jet industry. Government has it’s place. As for the New Deal? FDR was lectured to by Keynes to increase government spending, by a lot more than FDR was prepared to do. Well WWII made the decision for him. FDR could have spent all that money on roads, bridges, etc had Hitler & Tojo not been the threats they were, but history made that choice.

    Comment by Nick Balan — January 8, 2009 @ 6:34 am
  9. You have to remember though the free market works on it’s own schedule and that can be painful.

    The free market works on the schedule of its participants. That would be us.

    Look around the room you are sitting in, you’ll electric car refueling stations on each wall. Now you want higher charge speeds then you need more power. Most people will charge overnight in the homes and be happy with it.

    How the hell do you know what most people will be happy with? Seriously, that’s a mighty big assumption, and exactly the kind of stuff that makes for stupid decisions by economic planners in government.

    But we have to understand government has been picking winners and losers a VERY LONG time. the next time you step onto a Boeing Jet remeber it was the KC-135 that made the 707 successful and built the US passenger jet industry.

    That’s a fine example of what is not being talked about. In that case, the government had a real economic need, just like any of us, and sought to fulfill it with technology that could do the job. The fact that it helped launch the US passenger jet industry earlier than it would’ve launched is a side effect. It’s the same thing with the spending in WWII. The military had legitimate needs, and met those needs with what it thought was the best technology possible. That’s an example of legitimate economic decision-making.

    The problem is when government tries to pick winners and losers for the people. This is invariably a failure, it’s just a matter of degree. Ethanol is turning out to be an epic failure. The AT&T monopoly looks pretty bad in hindsight. Even the cable monopolies most cities have are failures.

    FDR was lectured to by Keynes to increase government spending, by a lot more than FDR was prepared to do.

    Considering the amount of damage done by FDR’s tax and spend regime, who knows how deep the depression would’ve been had he fully heeded Keynes’ advice?

    Comment by Quincy — January 8, 2009 @ 8:09 am
  10. Nick, you are quite wrong when you state:

    The Free Market may only look out a quarter or two whereas we should look and 5 or 10 years.

    Do you realize how many years it takes for an oil company to go from exploring a piece of terrain to the first barrel hitting a refinery? It’s measured in years.

    Do you have any idea of what sorts of forecasts are distributed to board members in discussing new projects, and the vast effort that goes into creating computer models, and in analyzing relevant data that is required to make the forecasts?

    Believe it or not, most successful firms put a great deal of effort into forward looking forecasting, and are often making major decisions now in anticipation of what they think will be happenning 10, 15, sometimes even 20 years down the road.

    Furthermore, there is another class of actor, the speculator, who has the effect of including future expectations into present prices, which not only reduces volatility, but prompts people with short term outlooks to react to future shortages or gluts. This is especially the case now, with the sophisticated futures markets that speculators use to ply their trade.

    The notion that free markets show short term thinking while government officials think in the long term is usually completely incorrect. Politicians often pursue policies that help them in the present, knowing that by the time the chickens come home to roost they will be long out of office. It is the businessman who is trying to earn a living indefinitely into the future who has to keep an eye to long term profitability.

    Comment by tarran — January 8, 2009 @ 8:21 am
  11. The notion that free markets show short term thinking while government officials think in the long term is usually completely incorrect. Politicians often pursue policies that help them in the present, knowing that by the time the chickens come home to roost they will be long out of office. It is the businessman who is trying to earn a living indefinitely into the future who has to keep an eye to long term profitability.

    tarran -

    Part of the problem with free markets is they don’t articulate the thought processes behind the prices well, so people without knowledge of the mechanisms at work view prices as an immediate phenomenon. Contrasted with a bold politician talking up a multi-year plan, markets appear short-sighted.

    The reality, of course, is that politicians and technocrats, like all human beings, are simply too stupid to accurately predict the future of a large-scale economy.

    Comment by Quincy — January 8, 2009 @ 10:17 am
  12. Why is everyone buying into this theory that WWII ended the depression? Is it only becuase there must be an antithesis to the canard that the New Deal ended the recession?

    Now of course the New Deal did no such thing – but was it really WWII that did the trick? And if so what part of WWII? The destruction of US industrial competition? Our looting of the British Empire and Europe in general ? The huge deficit spending for defense, The Marshall Plan, The GI Bill? Was it the huge Baby Boom and population growth after the War or the pent up demand? The isolation of a huge part of the world behind the Iron Curtain which created an artificial economy in the West? Was The Depression due to the lack of family formations subsequent to the deaths of WWI?

    I’m a bit skeptical of the “war always helps the economy” theory” I’m sure LBJ, Bush I, and Bush II are too, NOW.

    Comment by persnickety curmudgeon — January 8, 2009 @ 4:54 pm
  13. re. electric cars…I can see the day when the cops are all driving Prius politically correct vehicles and the like while the bad guys have all the GTO’s and Vette’s. If gas is outlawed only the bad guys will have gas.

    The only fuels that deliver more bang for the buck than petroleum are gunpowder and nuclear fission,,,neither of which are real handy for cars. Has anyone ever discussed population control through planned parenting as a solution to consider? Few of today’s problems can not be laid at the cause of too many people. We can limit our breeding by our own will or wait until Mother Nature does it..our ways seem a little kinder.

    Uffdaron

    Comment by ron stratton — January 10, 2009 @ 11:21 am

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