Jeff:
Thanks for cross posting. To try to make it worthwhile I'll toss in my 2 cents first.

I think that the need to make a profit is a good guess as to why ideas like consuming less don't make much headway, but this looks at the issue to narrowly. What I've long advocated is consumption substitution. The only thing people really have to spend is time. Then can bank time by working and turning it into money and then using it later, but spending money without reward (or the promise of future reward) is not something that people usually do.

To those who object (citing giving away money to charity, for example) I would say that the rewards purchased don't have to be tangible. Giving away money (and thus implicitly the time it took to earn it) provides some sort of psychic reward.

So if we wish to encourage people to consume less material "stuff" we can compete (and make a profit) by offering alternatives for their time. We have already seen this happening. The developed world now spends a good fraction on intangibles like entertainment, sports and celebration. A typical US family may spend $300+ a month on communication services (mobile phones, landlines, internet access) as well as on subscription TV, radio and movies. The providers expect to make a profit and compete with the sellers of "stuff". Notice that the prices of most of the intangible services are set to compete with the physical ones.

The marginal cost of downloading songs is almost nothing compared with selling a physical CD, but buyers are willing to pay almost the same price for either. They therefore value the service similarly whatever way they obtain it. This gives a competitive edge to the virtual providers. So indirectly they are promoting using less and making a profit.

Sellers of renewable energy may also have a similar model. The windmill makers earn less than does GE with a conventional generator, but they still make a profit and can attract business away from the existing firms. The one area where we have not seen any real progress is transportation. I don't know if this is because the cost of entry into the field is so high or because of anti-competitive regulations (roads get built for "free") or something else. This is a good area where Jeff's conjecture could be further explored.

Policies not Politics
---- Daily Landscape

Welcome to European Tribune, jeffvail!

This excellent diary is interesting because it addresses the central issue of sustainable energy policies and show which are the socio-economic obstacles to the development of new approaches, but also because it illustrates a broader field of issues which I think should be discussed on ET, namely the limitations of market as an efficient coordination mechanism.

I think many of us agree on the fact that market can be an efficient mechanism for certain categories of goods and services, but is inefficient for other categories (like energy).

It would be interesting to develop a debate on the different categories of goods and services and on which are the relevant (market or non-market) coordination mechanisms for these categories.


"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet

Greetings
It's interesting that the Free-market you describe doesn't sound free at all.

Welcome to European Tribune :).

By definition, intellectual property cannot exist in a free market. Intellectual property is a massive government intervention in the otherwise free market, it kills lots of freedom for nearly everyone, and for a very dubious gain.

And as you noticed, the mere presence of IP changes the behaviour of market participant and makes them engage into grossly inefficient pathes.

I don't know if free markets are a solution here, but what you're observing is nothing near a free market because of IP.

Mandatory quote:

    Just to illustrate how great out ignorance of the optimum forms of delimitation of various rights remains - despite our confidence in the indispensability of the general institution of several property - a few remarks about one particuilar form of property may be made. [...]

    The difference between these and other kinds of property rights is this: while ownership of material goods guides the user of scarce means to their most important uses, in the case of immaterial goods such as literary productions and technological inventions the ability to produce them is also limited, yet once they have come into existence, they can be indefinitely multiplied and can be made scarce only by law in order to create an inducement to produce such ideas. Yet it is not obvious that such forced scarcity is the most effective way to stimulate the human creative process. I doubt whether there exists a single great work of literature which we would not possess had the author been unable to obtain an exclusive copyright for it; it seems to me that the case for copyright must rest almost entirely on the circumstance that such exceedingly useful works as encyclopaedias, dictionaries, textbooks and other works of reference could not be produced if, once they existed, they could freely be reproduced.

    Similarly, recurrent re-examinations of the problem have not demonstrated that the obtainability of patents of invention actually enhances the flow of new technical knowledge rather than leading to wasteful concentration of research on problems whose solution in the near future can be foreseen and where, in consequence of the law, anyone who hits upon a solution a moment before the next gains the right to its exclusive use for a prolonged period.

    The Fatal Conceit: The Errors of Socialism, 1988 (p. 35) Friedrich von Hayek

top-notch diary, welcome to the funny farm, jeff.

you did a great job laying out your message, excellent communication, signal nice and clean.

this is the impasse, the choke point as brit calls it.

(so descriptively....squat and embed fangs indeed....)

THIS is why progress is treacle-slow, and why pure market-based solutions have passed their sell-by date.

the rational/materialist worldview presupposes a lot of givens that are being taken away, the trough is emptying, but the pigs know only one position....heads down and grub...

we need a radically different, worldwide acknowledgment of the blindingly obvious: what worked no longer does.

waiting for bought governments to see the light, when it disempowers their very raison-d'etre, is like to be a long haul, yet how long is dependent solely on how many of us can wake up and start walking the other direction, spreading the 'good news' that alternatives exist at all.

the public needs to come out of doze-mode and realize what a bill of goods it's been sold, and diaries like this need to be disseminated more widely, a welcome wake-up call.

you've put your finger squarely on the nexus of the problem, imo.

it behooves us to get on it as individuals, reducing our footprints, and rally for justice and change, notwithstanding the incredible array of vested interests in delaying the shift as much as they can.

they are brainstorming like crazy trying to figure out ways to keep us in the dark, and paying through the nose for what should be as widely distributed-at-near-cost as air, water, sanitation and broadband.

so we need to do the same...

you sure came to the right blog, this perspective has been under-emphasized around here, and fairly frequently drowned out by some who believe conservation to be irrelevant, and shiny new nukes the panacea.

when you track back the propaganda to its multinational source, it's pay-nfully plain to see why there is pooh-poohing of alternative energy as meaningful contribution, and disparagement of conservation, ala shooter cheney.

remember how they were telling us from the 80's on how solar was 'impractical', meanwhile the panels are popping up everywhere except where they would help consumers lower their bills....traffic signals, buoys, space satellites etc etc.

 uh-huh...

corporate conscience....owes no allegiance to humanity, decency, honour or compassion, just zeros digitizing on monitors somewhere.

homicidal greed masquerading as civilised behaviour-

and the longer this tragi-farce continues, the sharper and harder the fall.

so thanks for this bracing cuppa java...

i look forward to more of your diaries, a very auspicious start.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

Hmmm ... need to reflect on this. I think, however, that passive solar fell to the wayside for architects/builders because the culture became focused around man's domination of nature rather than living with nature.  

Just as with HVAC systems, they could ignore the passive solar aspects with impunity since technology (and cheap fossil fuel) could overwhelm the inadequacies of the passive solar design.

And, it was cheaper for mass home developers (tract homes in the United States, developments in Europe (apartments or otherwise)) to simply ignore the environment as they laid out the streets/such.  Again, power would enable overwhelming how badly they were designed.

Blogging regularly at Get Energy Smart. NOW!!!

It is amazing how much we expect from the free market alone. It must run all civilization, all the wealth of the world, nothing else.

The free market is indeed a powerful beast. But is is a wild beast. Why let it run untamed? Why must we depend on the way it spins? Why can't it be directed to most helpful turns?

I think the free market can accomplish for us much more if we not just react to its moods, but decide what purposes we must achieve more urgently. I do not mean that the government has to try hard. But if there is a foresight of more contructive and/or less wasteful market direction, is it responsible to wait? Especially in dealing with environmental and energy issues, we need more than moderation of greedy impulses; the best hope is to employ ingeniously the power of the market beast and compel people to act sensibly out of handy convenience.

I believe, for example, that the markets might even run health care, but with a discipline engineered for common benefit. I have a specific proposal for public transportation. I believe that the idea is already commercially viable and gradually implementable. But if it does not look profitable safely enough, a government may reasonably offer initial assitance. The particular transporation project alone does not bring CO2 emissions down to exemplary levels; but it may diminish substantially the ammount of gas unnecessary burning in traffic jams. People have to see that something is possbile!

I have ZERO hope that a "market" economy will ever produce the technologies necessary for a solar-powered society?  Why?

Because I have serious interest in the history of American aerospace.

Let me explain.

In a burst of pure genius, the airplane was invented by two Americans.  This was a private self-financed venture.  The Wright brothers were businessmen and looked to make a killing in airplanes.

Yet by 1916, the American aircraft industry was almost hopelessly behind the French and Germans.  Of course, much of this could be attributed to military spending but the fact is that both governments had jumped in with both feet almost as soon as it was clear that the airplane actually was possible.

Why is this important?

Simple.  Building airplanes is simply much too complicated to turn an immediate profit.  It requires years of expensive engineering and research. It requires patient capital.  It requires a working atmosphere where making ANY return on investment is regarded as foolish.  It requires cost-plus contracts because when inventing something new, anyone who tells you how long it will take or how much it will cost is, at best, a storyteller (liar is more accurate.)  

What does this have to do with a solar economy?

We do not have a solar economy for a very simple reason.  We don't know how to do it.  And unlike the promises of the "50 easy ways to save the world" types, building a solar economy will be VERY, VERY difficult, not to mention VERY, VERY, VERY expensive.  

The idea that such a project can be financed through the private sector is beyond insane.  A typical bond trader buying and selling the same financial instrument within a few minutes pretty much eliminates the possibility of "patient" capital.

But what about our hero Jerome??  Doesn't he prove that bankers are finally getting on board with investments in windpower?

Yes he does.  But keep in mind two important things here.

1. Wind power is the low-hanging fruit of the solar economy.  People have been making money using wind power since the days of Rembrandt.  Not exactly financing untested concepts here.

2. Go a site like Vestas--one of the big players in wind power.  Included at the site is a history of the sort of wind turbine they build.  This history is over 100 years old!!!!!  A LOT of "non-profit" effort over the years went into learning how to build turbines reliable enough to be a part of the electrical grid AND be cost effective enough so a regular banker will invest.
   

http://www.vestas.com/vestas/global/en/Wind_power/Discover_the_unique_power_of_the_wind/DUPOW.htm
(you must have Flash installed to play it)

The so-called "markets" are ONLY designed to finance the solar conversion AFTER all the research and development is already DONE.  But since we do not know how to build a solar economy, the KEY economic question is how we finance this R and D.

Until this question is answered, the solar economy simply will not be built.

I wrote a whole book on this subject.  Find out more at:
http://www.elegant-technology.com/DFbase.html


"Remember the I35W bridge--who needs terrorists when there are Republicans"

There are lots of businesses that by their nature are not "scaleable".  They tend to be local businesses, as opposed to national or global.  Generally healthcare is local, in the sense of delivery of healthcare.  So your normally find that general practice physicians, internicists, etc. are sole proprietership or partnerships.  They don't lend themselves to bel global businesses.  (On the other hand, people that make the products, or drugs used by these businesses, or often regional, national or global.  Because the products can be sold more broadly, and there are economies of scale, ability to innovate across markets, IP as you suggest.)

The same with lawyers.  Many types of consulting or local, though certain specialty areas of consulting have gone national or global, like strategic  consultants.  but there are also many local, state, or regional strategic consultants.

Why does the free market almost entirely ignore the potentially rich conceptual space of passive solar design? Precisely because the obvious value in this area--that of refining and implementing vernacular technologies--cannot be effectively controlled through existing intellectual property mechanisms. If it can't be controlled to produce a profit, then free market innovation is blind to its potential. Never mind that, in my opinion, passive solar design is the single most promising way to meet our future energy needs?

I'm wondering what the right business model would be for this.  Would this really even be a standalone business?  or would it be integrated into architectural firms--many of which are themselves local, or regional,,,,some have gone national or global.

and is there really a market need, as perceived by the customer, right now?  when you build a house, how big of an issue is this to the person building the house.  I am building a small home, and these issues have come up.  they are probably something like 5% of the total issues you confront when building a house--wild guess, hard to even think that way.  we're using an architect and general contractor, and these issues came up, we looked at alternatives and made decisions.  Specialists on window design, green roofs, types of heating systems were appropriately consulted.  so I guess from my standpoint as a consumer, it seems the market did provide the answers.

what is your idea, just taking this area of passive solar, that would better address the needs of consumers?--either in a free market system, or some other kind of system?