Climate Change/Mass Extinction Megathread

[Sheilbh]

Well the comparison is to buying an equivalent ICE vehicle.

Yeah - which is why cost matters.

I take the point. Although worth noting EU wide energy supply is about 70% from fossil fuels (coal is a significantly lower share though), so I suppose it'd depend how much of the supply chain is in Hungary or Poland v France or Spain. But even that comes back to cost ultimately because you'd need to compare the CO2 per vehicle as well and given all the complaints about Chinese overproduction I'm not sure it'd be worse. Again I come back to the purpose point - massive state aid from Chinese government at different levels results in more production and lower costs...Again I look at the market cap v high price point of Western manufacturers...

I think Hannah Ritchie did some analysis on this and basically if you are manufacturing an EV in a 100% coal powered economy then the lifetime emissions difference is marginal. Anything lower than that and the EV is always better. China's less than 55% coal-powered (and falling year on year).

[Iormlund]

I doubt the impact of buying a Chinese EV is actually net-negative (talking C0₂ levels).

Well the comparison is to buying an equivalent ICE vehicle.

According to the EPA the lifetime emissions of a BEV would be about 40%* of those of a gasoline vehicle. That is with US energy mix where coal is now less than 10% instead of over 50% for China.

I'm not saying EVs can't help, I'm saying Chinese EVs might not be such a boon to the environment as Sheilb thought.

*They also consider NO change of battery over lifetime.

[Sheilbh]

Sure - but that will shift. China's energy mix is changing rapidly.

But also a key point here is scale and cheapness. From a UK perspective, there's no domestic industry to protect. So I think, absent security/foreign policy issues, we should not increase tariffs on Chinese EVs because I think affordability will significantly increase adoption.

Separately for, say, South-East Asia, India etc and other markets where there may be a significant increase in car ownership in coming decades - I think relatively affordable Chinese EVs are probably very good for the world (especially as on current pace in coming decades China's energy mix will be a lot less fossil fuel heavy).

[Iormlund]

Apparently domestic automotive manufacturing accounts for 12% of UK exports. I wouldn't say that's negligible.
Especially since plants are not centered in London like the rest of the economy.

In addition if the UK becomes an entry point for cheap Chinese cars I imagine the EU would answer in kind.

[Sheilbh]

Apparently domestic automotive manufacturing accounts for 12% of UK exports. I wouldn't say that's negligible.
Especially since plants are not centered in London like the rest of the economy.

It's not negligible.

But I think the reality for the UK is that the US and China are in a trade war and, against its will, the EU is increasingly being dragged into one too. I think there are sectors of green manufacturing where the UK could establish a strong position that might be worth supporting and protecting.

But EV manufacturing isn't one of them. And on anything that is helpful towards energy transition my view is that if we can't establish meaningful domestic industry then low tariffs and cheap products are the better option.

In addition if the UK becomes an entry point for cheap Chinese cars I imagine the EU would answer in kind.

I think we're already a third country for car manufacturing. It's one of the most affected sectors by Brexit (and beend falling every year since 2016). I imagine they'd look again at other measures if the UK just became a point of re-selling cheap Chinese vehicles - though I'm not sure of the impact because the EU is the only major trading power who still cares about WTO rules EU tariffs (max 38% and a large variation by company) are nothing to US ones (100%).

[Iormlund]

On a more personal note, I really hope EVs succeed. If nothing else because I'm working on a fairly big new BEV platform that could feed me for the next 10 years. Otherwise I see myself doing the same crap I've been doing for years now.

Which is what sales figures seem to point at that right now. In fact, these last couple quarters we've been selling more ICE carsets than at any point since Covid hit. If I had to guess I'd say most people who were undecided finally lost faith on electric mobility and stuck with ICE.

In addition, I'm not seeing the massive (and I do mean massive) investment a country such as Spain would need to charge a substantial fleet of electric vehicles.

[HVC]

It's weird when cars where starting out states made huge infrastructure investments for roads and the like, but nothing really for EV infrastructure now. Guess economies are just different .

[Jacob]

What's wrong with a rentier state? It sounds perfect to me.

As I understand it rent-seeking is considered a negative in economics, separately from left vs right politics.

Rent seeking = "an entity seeking additional wealth without a reciprocal increase in productivity.

Getting (or being) rich from owning things rather than doing things is - I believe - generally considered to be a drag on the economy. If we all just own things and don't do anything, economic activity will seize.

Typically the argument that generating wealth by owning is constructive is that the owning class increases efficiency in managing their property (thus generating additional wealth) and that people will create/ be productive in the pursuit of getting into a rentier position. In other words, generating wealth from owning is not rent-seeking because it increases productivity through innovation and efficiency gains.

At the core, though, the ideal rentier position is that of a monopolist who can reap rents from people who have no choice to pay in order to exist. I believe it's typically agreed that this is neither efficient nor just (though I expect you to disagree ) - and that this was agreed on both the right and left, with the disagreement on this being primarily about how to prevent the economy to turn into a rentier economy.

That said - rent-seeking is natural and entrenched rentiers obviously find it in their own interest to maintain that position and will argue that it is a good (or natural) thing.

It sounds like the argument being made is that rentiers and rent-seeking has become more entrenched in recent times and that this trend will continue.

It also sounds like the political right (in some places at least) has decided rent-seeking is good, so we're seeing more of an argument that it is in the discourse... and maybe that means opposition to monopolists and rentiers is becoming left-wing by default?

[Admiral Yi]

As I understand it rent-seeking is considered a negative in economics, separately from left vs right politics.

Rent seeking = "an entity seeking additional wealth without a reciprocal increase in productivity.

Getting (or being) rich from owning things rather than doing things is - I believe - generally considered to be a drag on the economy. If we all just own things and don't do anything, economic activity will seize.

Typically the argument that generating wealth by owning is constructive is that the owning class increases efficiency in managing their property (thus generating additional wealth) and that people will create/ be productive in the pursuit of getting into a rentier position. In other words, generating wealth from owning is not rent-seeking because it increases productivity through innovation and efficiency gains.

At the core, though, the ideal rentier position is that of a monopolist who can reap rents from people who have no choice to pay in order to exist. I believe it's typically agreed that this is neither efficient nor just (though I expect you to disagree ) - and that this was agreed on both the right and left, with the disagreement on this being primarily about how to prevent the economy to turn into a rentier economy.

That said - rent-seeking is natural and entrenched rentiers obviously find it in their own interest to maintain that position and will argue that it is a good (or natural) thing.

It sounds like the argument being made is that rentiers and rent-seeking has become more entrenched in recent times and that this trend will continue.

It also sounds like the political right (in some places at least) has decided rent-seeking is good, so we're seeing more of an argument that it is in the discourse... and maybe that means opposition to monopolists and rentiers is becoming left-wing by default?

A rentier is not seeking rents in the economic sense, which is another word for monopoly profits.  A rentier is simply someone who owns financial assets and uses the income generated by those assets to fund living expenses.  For example you might have read that Weimar hyperinflation destroyed the rentier class. 

[Jacob]

A rentier is not seeking rents in the economic sense, which is another word for monopoly profits.  A rentier is simply someone who owns financial assets and uses the income generated by those assets to fund living expenses.  For example you might have read that Weimar hyperinflation destroyed the rentier class. 

If you look up the definition of rentier capitalism you get "the gaining of 'rentier' income from ownership or control of assets that generate economic rents rather than from capital or labour used for production in a free competitive market."

I suppose an individual can be a rentier in the sense that you use the word - in that they use their capital in the market to generate production of some sort, and reap the benefits. But if the market as a whole rewards rent-seeking, and the individual investor follows the market trends and invests in rent-seeking entities, then the individual rentier would functionally be a rent-seeker.

Next, I'll have to disagree with you equating rent-seeking with monopolism.

Monopolists can be rent-seeking (it's a common strategy), but the two terms are not synonymous. If a monopolist strives to increase productivity or utility as a means to increase their profits, they are not rent-seeking (at the moment at least). Conversely, if they increase their charges just because they can, without creating any other economic utility - they are.

On the other hand, you can absolutely be a rent-seeker without holding a monopoly. The slum-lord who doubles the rents of his properties, without ever having put any work into them is a classic rentier. The IP holders of the song "Happy Birthday" are rent-seekers - collecting fees for people performing a song. In fact anyone who buys an IP - be it creative or scientific or medical or anything else - for the sole purpose of collecting fees, without doing anything to improve the IP or facilitate its use - is a rent-seeker.

Being a rentier is delightful - you live a good life and get richer simply because you own things (maybe you inherited them, maybe because you were smart with the assets your earned through your work). So a rentier society is close to ideal, as you say, for the rentier class. It's probably going to be much less than ideal for those who do not belong to the rentier class, and it may not be good for the economy overall.

[Barrister]

What's wrong with a rentier state? It sounds perfect to me.

As I understand it rent-seeking is considered a negative in economics, separately from left vs right politics.

Rent seeking = "an entity seeking additional wealth without a reciprocal increase in productivity.

Getting (or being) rich from owning things rather than doing things is - I believe - generally considered to be a drag on the economy. If we all just own things and don't do anything, economic activity will seize.

Typically the argument that generating wealth by owning is constructive is that the owning class increases efficiency in managing their property (thus generating additional wealth) and that people will create/ be productive in the pursuit of getting into a rentier position. In other words, generating wealth from owning is not rent-seeking because it increases productivity through innovation and efficiency gains.

At the core, though, the ideal rentier position is that of a monopolist who can reap rents from people who have no choice to pay in order to exist. I believe it's typically agreed that this is neither efficient nor just (though I expect you to disagree ) - and that this was agreed on both the right and left, with the disagreement on this being primarily about how to prevent the economy to turn into a rentier economy.

That said - rent-seeking is natural and entrenched rentiers obviously find it in their own interest to maintain that position and will argue that it is a good (or natural) thing.

It sounds like the argument being made is that rentiers and rent-seeking has become more entrenched in recent times and that this trend will continue.

It also sounds like the political right (in some places at least) has decided rent-seeking is good, so we're seeing more of an argument that it is in the discourse... and maybe that means opposition to monopolists and rentiers is becoming left-wing by default?

There's a big distinction though between "rent seeking" and "rent".

Many/most do not consider "rent" itself to be bad, as you are providing a service.  You build a house then you rent it our to a lessee.  As such I disagree with the notion that "getting rich by owning things rather than doing things" is wrong - as you are in fact doing things.  Even if you're just an investor in the stock market you're helping in providing an efficient allocation of resources.

Rent-seeking in no way provides any service - it's just a pure cost or drag.  A politician who says "I'll only approve your building permit once you pay me a bribe" is a rent-seeker.  A mafioso demanding a business pay "protection money" is a rent-seeker.

Rent seeking doesn't have to be illegal though.  It often gets caught up in notions of "regulatory capture" where various regulations initially designed to protect the public wind up being subverted to protect the interests of the industry itself.  Taxi licenses are one example (until being upended by Uber and Lyft).  The number of taxi licenses was artificially reduced thus leading to higher prices for taxi riders.

[Admiral Yi]

ren·tier
/ˌränˈtyā/
noun
noun: rentier; plural noun: rentiers

    a person living on income from property or investments.

Rentier capitalism is not something I'm familiar with.  Never heard the term in an econ class.

[Norgy]

Jacob is pretty much right about Norway.
We produce little else than oil and gas. And guns and ammo. Some salmon and car parts. And mediocre journalists like me. We were pretty effective at producing Waffen-SS volunteers, though.

[Admiral Yi]

Next, I'll have to disagree with you equating rent-seeking with monopolism.

Monopolists can be rent-seeking (it's a common strategy), but the two terms are not synonymous. If a monopolist strives to increase productivity or utility as a means to increase their profits, they are not rent-seeking (at the moment at least). Conversely, if they increase their charges just because they can, without creating any other economic utility - they are.

On the other hand, you can absolutely be a rent-seeker without holding a monopoly. The slum-lord who doubles the rents of his properties, without ever having put any work into them is a classic rentier. The IP holders of the song "Happy Birthday" are rent-seekers - collecting fees for people performing a song. In fact anyone who buys an IP - be it creative or scientific or medical or anything else - for the sole purpose of collecting fees, without doing anything to improve the IP or facilitate its use - is a rent-seeker.

Being a rentier is delightful - you live a good life and get richer simply because you own things (maybe you inherited them, maybe because you were smart with the assets your earned through your work). So a rentier society is close to ideal, as you say, for the rentier class. It's probably going to be much less than ideal for those who do not belong to the rentier class, and it may not be good for the economy overall.

This is entirely different than the understanding of rents that I learned in class.  There I was taught that rents only have relevance in relation to the hypothetical free market price, which is determined by the intersection of marginal cost and marginal revenue.  In a competitive market the producer is a price taker, not a price maker.  If he raises his price one penny per unit all his demand will disappear because his customers will immediately desert him and buy his homogeneous product from a competitor.

How will your slum lord double his rents if he is renting out an identical slum apartment to the slum lord next door?

Yes, I suppose you could say that IP is a state protected form of granting rents.  IP laws prevent people from simply copying a work, like say a video game, and selling it more cheaply than you are.

[Crazy_Ivan80]

Jacob is pretty much right about Norway.
We produce little else than oil and gas. And guns and ammo. Some salmon and car parts. And mediocre journalists like me. We were pretty effective at producing Waffen-SS volunteers, though.

the oil, gas, guns, ammo, salmon and car parts are all needed so there's that