In the United States, powerful factions are calling on the government to “phase out nuclear energy.” Meanwhile, the Spanish government plans to phase out nuclear power by 2035, following similar anti-nuclear pledges by Germany and Switzerland. Adam Smith’s life ended more than 150 years before the first nuclear chain reaction, but his ideas are key to understanding today’s debates about nuclear energy policy.
What would the father of economics make of those who seek to move markets away from nuclear power? In Inquiry into the Nature and Causes of the Wealth of Nations, he wrote:
The market price of any particular commodity is regulated by the ratio between the quantity actually brought into the market and the natural price of the commodity, or the demand of people willing to pay the sum of rent, labor, and wages. profit.
Almost two and a half centuries later, some policymakers still do not understand Smith’s profound insights into the importance of market signals and the laws of supply and demand.
Advocates of government control of energy choices often argue that green energy (defined narrowly to exclude nuclear power) is the future, not the past. However, Smith also mentions “wind” in his writings. [and] Established “water wheel” as a technology. Half a century ago, an efficient solar energy device fueled the plot of the 1974 James Bond film. Fifty years later, some still believe that such a device is just around the corner.
And subsidies are also increasing. In 2015, solar and wind power were subsidized 326 times more and 69 times more per unit of energy produced than traditional power sources, respectively, in the United States. According to a study by the University of Texas, by 2019, solar power will receive up to $320 in cash from the government, and wind power will receive about $57 per megawatt-hour of output, or about 640 times and 114 times more than traditional electricity. He said he received it. And that was before the Biden-Harris administration effectively doubled those subsidies in 2023 (nuclear subsidies pale in comparison).
Most of the subsidies for solar power generation go toward housing equipment. Solar companies can’t compete without government support, but with so much government support available, it’s still profitable to install a rooftop system that costs at least $10,000 with no upfront payment to the consumer. . As Mr. Smith well understands, this hurts both taxpayers and consumers. He once pointed out that subsidies “would ultimately fall on the consumer, not the shopkeeper, and would represent a significant overcharge on the shopkeeper’s profits.”
It’s easy to spend other people’s money. Smith observed:
However, directors of such companies are custodians of other people’s money rather than their own, and are therefore subject to the same uneasy vigilance with which partners in private joint ventures frequently monitor their own money. You can’t expect much from monitoring it. …Like the rich butler, they…. You can easily get away with it. In the management of the affairs of such companies, therefore, negligence and busyness must always prevail, to a greater or lesser extent.
These high subsidies generate low returns on taxpayer investments. According to the U.S. Energy Information Administration, solar power provided just 3.4 percent of electricity in the U.S. in 2022, and wind power provided just 10 percent. These power supplies fail despite huge subsidies because they are inherently unreliable and a cloudy day with no wind can ruin an entire enterprise. Nature is fickle, but Smith quipped that “elements of human folly and injustice” are “even more uncertain” than “the winds and waves.” This foolishness is on full display when it comes to energy subsidy policy.
Given the limitations of battery storage technology, these forms of power are simply not scalable and inefficient. Smith was a vocal supporter of increased energy productivity, praising the efficiency advances in early steam power.
In the first fire engines, a boy was always employed to alternately open and close the communication between the boiler and the cylinder as the piston rose or fell. One of the boys, who loved to play with his friends, noticed that if he tied a string from the handle of the valve that opened this communication to another part of the machine, the valve would open and close without his help and move away from him. . Feel free to have fun with your playmates. One of the greatest improvements made to this machine since it was first invented was the discovery of a boy who thus wished to save his labor.
Many bureaucrats lavish taxpayer dollars on their preferred energy sources while enacting rules restricting the construction of new nuclear power plants that are mathematically impossible to meet, and other forms of Discriminating against electricity. Such strict overregulation is tantamount to prohibition. Some environmental activists admit.
Unfortunately, the preference for certain energy sources over others appears to be tied to political considerations rather than the costs and benefits of each source. Smith recognized that complex information about costs and benefits could be extracted and transmitted through price signals. Sadly, anti-nuclear advocates have distorted energy markets with subsidies that artificially lower the cost of some energy sources and onerous regulations that raise the cost of others.
This is not to say that wind and solar energy are never practical. However, highlighting the shortcomings of many of these technologies shows that they fail to heed the market signals that Smith recognized centuries ago and prioritize some energy sources over others. The stupidity of the bureaucracy is revealed. Market prices convey a wealth of knowledge about the utility of a particular energy source and should only be ignored at great risk.
Blackouts and energy rationing are the inevitable consequences of ignoring such price signals and instead promoting certain types of electricity at taxpayer expense. Consider the continuous blackouts and blackouts that hit New England in 2022. At this time, electricity was rationed after unwise policies forced the adoption of politically privileged energy sources over reliable ones. Those who were paying attention to market signals predicted this. But these warnings fell on deaf ears due to what Smith once called “the inevitable ignorance of public administration.”
Ultimately, “phase-out” plans and over-regulation have left nuclear power unable to compete on a level playing field with heavily subsidized but less reliable power sources. As a result, humanity and the natural environment are being deprived of the cleanest and most reliable energy source ever devised. If only more policymakers had the decency to embrace Smith’s timeless wisdom.
Andrew Follett conducts research and analysis for nonprofit organizations in the Washington, DC area. He previously worked as a space and science reporter at the Daily Caller News Foundation.
