Abstract
The above quotes on the “dismal science” of economics by early theorists, Adam Smith and Thomas Malthus, are relevant today. Thus far, Smith’s vision leads in the debate. Malthus’s prediction has been headed off, somewhat, as new technologies have increased our capacity to support increased populations. The powers of the marketplace rode supreme in both Eastern and Western Europe as Marx was buried a second time, and it continues to do so, however imperfect it is. On the other hand, energy markets were dramatic failures for energy-efficient cars and household appliances, until regulations were introduced. Smith’s hidden hand corrects inefficiencies only weakly, as consumers can be apathetic when casually purchasing energy technologies. Hopefully, Malthus’s frightening theory can be buried alongside Marx, but long-term questions on Earth’s sustainability persist when seen against a backdrop of increasing global consumption.
… there is scarce perhaps a single instant in which any man is so perfectly and completely satisfied with his situation as to be without any wish of alteration or improvement of any kind … He … neither intends to promote the public interest, nor knows how much he is promoting it … he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention.
(Adam Smith, The Wealth of Nations, 1776)
Famine seems to be the last, the most dreadful resource of nature. The power of population is so superior to the power of the earth to produce subsistence for man, that premature death must in some shape or other visit the human race…gigantic, invisible famine stalks in the rear, and with one mighty blow, levels the population with the food of the world.
(Thomas Malthus, An Essay on Population, 1798)
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Notes
- 1.
Even without inflation, money has historically had an income rate since there is an opportunity cost that one forgoes by not investing. The banks pay customers the historical cost rate (plus inflation rate), allowing the banks to make money on their investments, such as real estate. Of course, there are times when the true cost of investing money is negative, when market values drop.
- 2.
The DOE values are credible, but there are differences between experts (Joskow and Marron 1993).
- 3.
J. Holdren, S. Fetter, M. Bunn, and B. van der Zwaan, Nuclear Technology 150, 209–230 (2005).
- 4.
Capital cost [nuclear ($2/We), coal ($1.3/We), natural gas ($0.5/We)]. Cost at busbar [nuclear (6.7 ¢/kWh), coal (4.2 ¢/kWh), natural gas (4.1 ¢/kWh)]. Nuclear operation and maintenance (1.5 ¢/kWh), capacity factor (85 %), lifetime (40 year) (Deutch and Moniz 2003).
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Hafemeister, D. (2014). Energy Economics. In: Physics of Societal Issues. Springer, New York, NY. https://doi.org/10.1007/978-1-4614-9272-6_16
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