June 28, 2004

Burch on Lutas on Burch on Energy


Greg Burch answers my critique on the idea that Beijing will quickly become cleaner thanks to the birth of the hydrogen age. He rightly points out that the PRC government has enormous resources to dump into a vanity project to clean up Beijing smog. This is the option of virtually every totalitarian government out there. They can always rob 5 peters to pay 4 pauls.

What I had left out of my prior analysis was a very big assumption that, being implicit, might have been missed. The assumption is that the PRC leadership is in a huge bind, racing somewhat ahead of a disaster of popular disappointment and revolution. The problems of their rotten banking sector, pervasive corruption, lack of jobs, huge economic drains of State Owned Enterprises, and just general lack of legitimacy makes the exercise of shifting money out of current uses to a pollution cleanup that doesn't make economic sense very dangerous to regime stability. The PRC apparatchiks are already juggling just as many balls as they can handle and I think they're just about out of the ability to add more glamour projects that don't make economic sense.

As the PRC grows rich, clean technology will become worth it for them. Until they get rid of their unemployment problem and/or other regime threatening crises, it isn't likely to happen.

Posted by TMLutas at June 28, 2004 02:41 PM