Who decides? Who pays?

The biggest reason for the disconnect between government plans and government achievement is the lack of immediate consequences for poor decisions.  While elected officials are in theory answerable to the voters, the deck has been stacked in the officials' favor - gerrymandered districts, big campaign donations, the system is designed to ensure a higher reelection rate to the US House of Representatives than to the old Supreme Soviet.

So how could you even begin to expect efficient delivery of public services?

Gordon Brown, the former (and unlamented) UK Prime Minister, highlighted this the other day.  Brown was writing about renewable energy, and the importance of "decarbonizing" the world's economy, and how he had a plan that would provide outstanding services at trivial cost:

But the biggest driver of climate change action -- and the biggest job creator of all -- could be a European Union commitment to a low carbon energy super-grid as a mega pan-European initiative. The evidence is compelling. ...

A low carbon European super-grid -- an enhanced transmission network, connecting power sources to demand across and beyond the continent -- is the most productive, ethical and practical way forward. The super grid is an asset that makes economic and environmental sense. And by investing an additional 1OO billion dollars a year to 2050, thousands of jobs and exports will follow.

Thousands of jobs would follow!  And all for the low, low price of $100 Billion a year for 40 years.

Now fair is fair, and this is a good time to point out that Mr. Brown was indeed answerable to the voters, which is why he is now referred to as "the former PM".  But the mindset on display here is no stranger to Washington D.C., and springs from a common source.

The difference between a company proposing something new - say, Sony's new PlayStation Move motion capture controller - and some politician proposing something new is this:

Sony decides to make a product, but Sony pays.  The politician decides on the program, but we pay.

That is a hugely dislocated feedback loop, one that is guaranteed to produce poor results.  Consider a company looking at getting into "green" energy in a big way.  The company would absolutely do an analysis like this:

Energy Comparison
1 ton of coal = 6,182 KWH
1 barrel of oil = 1,699 KWH
1 cubic foot of gas = 0.3 KWH

Energy Costs
1 ton of coal costs $36 = $0.006 per KWH
1 barrel of oil costs $70 = $0.05 per KWH
1 cubic foot of gas $0.008 = $0.03 per KWH

They'd also include something like this:

A 2010 OECD study Projected Costs of generating Electricity compared 2009 data for generating base-load electricity by 2015 as well as costs of power from renewables, and showed that nuclear power was very competitive at $30 per tonne CO2 cost and low discount rate. The study comprised data for 190 power plants from 17 OECD countries as well as some data from Brazil, China, Russia and South Africa. It used levelised lifetime costs with carbon price internalised (OECD only) and discounted cash flow at 5% and 10%, as previously. The precise competitiveness of different base-load technologies depended very much on local circumstances and the costs of financing and fuels.

In other words, a few cents per KiloWatt-Hour for electricity generated by nuclear.  The company would also likely look at something like this:

5-10 cents per kWh
(lower numbers associated with larger Wind Farms).

However, installed cost per kilowatt figures for wind turbines are somewhat misleading because of the low capacity factor of wind turbines (i.e. the ratio of actual energy produced by a power plant to the energy that would be produced if it operated at rated capacity for an entire year)

At this point, someone at our hypothetical company would start asking a few questions about realistic rates for capacity factor* (20% for most wind farms), and say, "Hmmm ... 20% capacity means you have to build five times as many, which means that your 5 cents per KWH is really 25 cents per KWH.  No, thanks."

Our hypothetical someone would say this because he's betting the company's money.  If the bet is bad, his career might be OK - there are lots of times things don't work out the way people planned.  However, if they didn't work out and he hadn't even run the numbers, he'd be gone faster than you can say "Cap And Trade is deader than a doornail."  You don't get to keep betting the shareholder's cash if you don't even do your homework.

The feedback loop works the way it should here.  Shareholders don't want their assets squandered on commodity "solutions" that cost ten times the going rate.  Shareholders get management that at least makes the motions of doing the work.  And so the people who decide are the people who pay.

Now consider Mr. Brown.  He has a lovely $4 Trillion plan for the people of Europe.  There should be "thousands" of jobs in it, somewhere.  Mr. Brown wants to be the the guy who decides.  Who is the guy who pays?

The taxpayers (amount unknown, but it's subsidies that's driving wind farms), but especially the ratepayers.  Electricity is a commodity - the voltage that comes from Coal plants is precisely the same as the voltage that comes from windmills.  However, the voltage from the coal plants costs a penny per KWH, and the voltage from the windmill costs 25 times that.  And oh by the way, solar power is no better.

The people who benefit (a political class with a huge new spending program, where they can direct contracts to favored supporters) is different from the people who pay.  "Thousands of jobs"?  You'd better have thousands of new jobs after you've raised the price of electricity by a factor of twenty, to make up for the ones lost when factories shut their doors and move to China.

In other words, the political elite decide, and the little guy gets screwed by the Progressive State.  Again.  Lefties, I know that math is hard and everything, but in future please do your homework.  And shut up about how "Progressives" care for the little guy.

* "Capacity Factor" is a reflection of the fact that when the wind doesn't blow, or doesn't blow hard enough, or blows too hard, your windmill doesn't generate any electricity.  The factor is expressed as a percentage of the time when usable power is being produced.  It's shockingly low.

UPDATE 13 October 2010 13:06: Via The Daily Bayonet, we find this outstanding film, Europe's Ill Wind:



Interestingly, the Franny Armstrong shown at 17:45 discussing how the government should stifle anti-wind debate is the same Franny Armstrong behind the 10:10 Blow Up The Children For Mother Gaia video.  I guess I need to update my "renewable" power tag line:

Welcome to the world of Alternative Energy: unreliable, intermittent power that costs ten times the alternative while reducing pollution and Carbon Emissions not one bit.  But shut up about it, or we'll send you to the Camps.