The Cost of Things

Mountain streamWe humans value economic goods. But everything we value doesn’t necessarily have to be an economic good. What’s the defining characteristic? The demand for the good has to exceed the supply for it to be thought of as an economic good.

Let’s look at some goods and ask if they are economic goods or not. You are walking along a clear mountain stream in the wilderness. Is the water an economic good? No, because the demand for the water in the stream (only you are the consumer for miles around) is much less than the supply. Is the water of value to you? It certainly is: you can drink the water or take a bath. A thing of value need not be an economic good but any economic good has a positive value (and conversely, an economic bad has a negative value.) Continue reading

India Must Invest in Solar Power R&D Now

Forget anthropic global warming. Sure there is climate change. But when did the climate ever not change? Even before hominins walked upright, climate has been changing. Indeed, without climate change, we would not be here. Climate change from a reducing to an oxidizing atmosphere allowed complex lifeforms on earth to develop. Life has always changed the climate — and will continue to do so. What matters is not climate but what mankind’s major sources of energy is.
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Two consonent views on the 123 Agreement

The American administration sent a letter to the Congress clarifying what the 123 Agreement with India entails for the US. The letter was leaked recently. There’s nothing in the letter which should come as a surprise because its contents are consistent with what the Americans have been saying all along. What the letter strongly suggests is that either that Prime Minister Manmohan Singh is lying or it is clearly delusional.

Here’s the view of a former chairman of the Atomic Energy Commission, PK Iyengar, expressed in an article in The Pioneer. He says that India’s freedom to test will be curtailed. This is, in his opinion, undesirable as testing is essential for India to maintain a credible nuclear deterrence.

Arun Shourie makes the case that the Americans are bound by their Atomic Energy Act of 1954 and the Hyde Act, and that the 123 Agreement does not in any way invalidate them. (I don’t have a link to Shourie’s article, and so I will post his article below the fold until such time that I have a link.)

My view is that India should not sign the agreement. I find the arguments by Iyengar and Shourie persuasive. Just for argument’s sake, let’s assume that it is a bad agreement and India pays dearly for it down the line. What is the penalty that those who pushed India into such a bad deal face? None at all. Mr Singh and boss will never have the pay for the follies, just as their predecessors whose gross stupidity has caused untold misery on hundreds of millions of Indians got away with no penalty (and indeed they are celebrated as great visionaries and leaders.)

I think that the prime minister is not a deluded fool and knows fully well what the 123 Agreement will do to India. That forces me to conclude that he is dishonest in his insistence that it is good for India. But then it is not the least surprising to find dishonest politicians in India. That’s Indian democracy for you — and therein lies the only consolation for me: the people choose unwisely and it is they who will suffer the consequences of their choices.

It’s all karma, neh?
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The PickensPlan

You’ve got to hand it to the Americans — they think big. Thinking big is the first step to doing big things. There too they are no slouches. Both in terms of good and bad, they do think and do big things. The modern world you and I inhabit (and it is important to remember that not everybody lives in the modern world — a couple of billion of our contemporaries live in a world that is decidedly primitive) has been shaped by Americans to an extent that is hard to overstate. Love it or hate it, you cannot ignore the US.
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About the Nuclear Energy Deal

One has to defer to experts when it comes to matters that one does not know much about. I don’t know what the deal is with the nuclear agreement with the US is and over which the UPA government is possibly going to fail tomorrow.

In the mail today was a piece by a retired chairman of the Atomic Energy Commission. It is reasonable to suppose that he knows what he is talking about. So here’s what he calls “Ten misconceptions about the nuclear deal” by P. K. Iyengar below the fold.
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India’s Energy Challenge

I have a piece in today’s livemint.com on India’s Energy Challenge. The money quote is this:

The advanced industrialized economies were lucky to have had their development fuelled by cheap fossil energy. Today’s developing economies have a much tougher challenge. It was a very short window of opportunity which opened just about 150 years ago and is likely to close in the next 40 years, by when the known reserves will be depleted at current levels of consumption.

All told, 200 years is a very brief interlude considering thousands of years of human civilization and hopefully hundreds of thousands of years yet to come. At some time in the distant future, they will look back and remark that the age of fossil fuel was a short inflection point, a point at which humanity passed through the bottleneck of dependency on oil from the ground. Before that point, humanity’s primary source of energy was the sun, and so it will be after that point.

The full article is below the fold. Continue reading

Solar or Nuclear: Which is the better option for India?

It is easy to argue that energy is the binding constraint that faces all of humanity, not just the developing economies. Of course, given the projected increase in demand and the decline in the supply of fossil fuel energy, the price of energy will continue to move up–with predictable adverse effects on the growth prospects of the emerging economies.
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The “dot-corn” Bubble

The April 7th cover story of TIME, “The Clean Energy Scam,” claims that by pushing corn-derived ethanol in the US as an additive to oil, politicians and Big Business are making a bad situation worse. It is causing food prices to rise globally, contributing to global warming, and stealing money out of the public purse.

To some this is old hat. For a while people have been arguing against corn-based ethanol. Mother Jones magazine did a story on it in November 2007 (where I had come across the term “dot corn”). The graphic below from there succinctly makes the case against corn-based ethanol.
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