{"id":677,"date":"2014-06-11T17:47:23","date_gmt":"2014-06-11T17:47:23","guid":{"rendered":"http:\/\/www.wallstreetandkstreet.com\/?p=677"},"modified":"2014-06-11T17:47:24","modified_gmt":"2014-06-11T17:47:24","slug":"in-china-gray-is-the-new-green","status":"publish","type":"post","link":"https:\/\/www.wallstreetandkstreet.com\/?p=677","title":{"rendered":"In China Gray is the New Green"},"content":{"rendered":"

I usually wake up around 3:30 to catch the market action in Asia and Europe on Bloomberg and CNBC. It\u2019s nice to get a non-U.S. perspective on all the craziness. Last night I was blown away by this exchange on Bloomberg between the anchor and a smart consultant who is an expert on consumer demand in China. This is a faithful representation but not an exact transcript. (This is not<\/em> a parody; emphasis mine.)<\/p>\n

Bloomberg Anchor<\/strong>: \u201cSo, what would you say is the current state of consumer demand in China?\u201d<\/p>\n

Consultant<\/strong>: \u201cOn the whole, it is the weakest I have seen in years.\u00a0 The luxury market is weakening because of the anti-corruption campaign. Prada, Louis Vuitton, brands like that will have a much harder time. But tourism and foreign travel to places like Italy are holding up well, which is positive for luxury.\u201d<\/p>\n

Bloomberg Anchor<\/strong>: \u201cWhat about auto demand?\u201d<\/p>\n

Consultant:<\/strong> \u201cOh, demand for autos is very strong. The pollution is so bad in major cities that people don\u2019t want to walk<\/strong>.\u201d<\/p>\n

Bloomberg Anchor<\/strong>:\u00a0 \u201cOh my goodness.\u201d<\/p>\n

Consultant<\/strong>:\u00a0 \u201cAlso, there is a rush to buy autos before the government limits the number of car licenses granted, as part of its anti-pollution drive.\u201d<\/p>\n

So this is what it has come to in Beijing, Shanghai and Quanzhou. People drive rather than walk to avoid pollution, but perhaps not for long because auto licenses may be limited by the government. I have not seen enough smart Wall Street research on how to play the anti-pollution drive in China. Clearly, companies involved in producing cars with lower emissions stand to benefit.<\/p>\n

From Photosynthesis to Fossil Fuels<\/strong><\/p>\n

I have been reading essays by the great British economic historian E.A. Wrigley.\u00a0 He makes the important point that the growth of traditional \u201cundeveloped\u201d economies was limited by the availability of land<\/strong>, because such acreage as was not devoted to producing food for man and beast was used to grow timber for construction and fuel. He calls this an \u201corganic\u201d economy limited by the power of photosynthesis<\/strong> to produce crops and trees.<\/p>\n

This \u201corganic\u201d constraint, Wrigley argues, was finally broken by using fossil fuels. The Netherlands, the first European economy to grow rapidly, used peat (as well as windmills).\u00a0 And then England began to use the enormous reserves of coal in the Northeastern counties, which was shipped down to London by coastal vessels.\u00a0 Coal was dirty but effective in modernizing and industrializing England; it was used both for heating and for myriad industrial activities. Making bricks and glass, for example. After the Great London Fire of 1666 the metropolis was rebuilt in brick, yet the price of bricks remained quite stable during the building boom because brick makers using coal were able to vastly expand output. Thanks to cheap coal, most English farm houses had glass windows, which was not the case in France. Throughout the 19th<\/sup> century coal produced in a fairly small part of Britain was used to turn the country into \u201cthe First Industrial Nation,\u201d boasting a higher living standard than continental Europe.<\/p>\n

The pattern was different in the U.S., where early economic development was supported by abundant water power (which drove New England\u2019s famous textile mills) and timber (which, converted into charcoal, sustained the iron industry until the 1840s). Steam engines were mainly used in steamships and railroads, not factories, in the first third of the 19th<\/sup> century.<\/p>\n

Will Alternative Energy Take Us Back to 1600?<\/strong><\/p>\n

Why should we care? Because today\u2019s \u201crenewable energy\u201d mania is once again making the availability of land a major constraint on energy production, as in the early 17th<\/sup> century<\/strong>. If you don\u2019t get energy from coal mines, oil wells and gas wells, you need to cover the landscape with windmills and solar panels.\u00a0 Ugh. Let me cite one example, which I highlighted in a November 2012 post titled \u201cSuburban Sunstroke.\u201d\u00a0 \u00a0Princeton University is proud to produce 5.8% of its electricity on 27 acres of bleak industrial wasteland (which I have surreptitiously visited) bearing the hilariously euphemistic label of a \u201csolar farm.\u201d\u00a0 It is fenced off from wildlife; nothing grows there except forlorn weeds shaded by solar panels. Near the entrance are two or three sheds built with sheet metal and, in one corner, a giant heap of black asphalt. We saw a large white tail deer bound up a hill to the chain link fence surrounding the \u201cfarm;\u201d it was forced to make a detour of several hundred yards. Very green!!!<\/p>\n

Anyhow, let\u2019s do some arithmetic. If the University uses 27 acres to produce 5.8% of its electricity, it would need a \u201csolar farm\u201d covering 466 acres to produce all<\/em> of its electricity. If we assume, very conservatively, that the Town of Princeton uses as much electricity as the University, the two together would need to use \u2013 or should I say destroy? \u2013 932 acres<\/strong> just to produce electricity for one tiny piece of New Jersey. That\u2019s 11% more than the 843 acres in New York City\u2019s Central Park<\/strong>. Oh, and by the way, the University gets subsidies from New Jersey tax payers to make its solar \u201cfarm\u201d financially feasible\u2014which means higher electricity bills for poor and middle class consumers to subsidize the green dreams of a university with an $18 billion endowment.\u00a0 No wonder inequality is rising in Barack Obama\u2019s America.<\/p>\n

Copyright Thomas Doerflinger 2014. All Rights Reserved.<\/p>\n","protected":false},"excerpt":{"rendered":"

I usually wake up around 3:30 to catch the market action in Asia and Europe on Bloomberg and CNBC. It\u2019s nice to get a non-U.S. perspective on all the craziness. Last night I was blown away by this exchange on … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[359,141,357,117,358],"class_list":["post-677","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-autos-in-china","tag-china-pollution","tag-economic-development","tag-princeton-university","tag-solar-power"],"_links":{"self":[{"href":"https:\/\/www.wallstreetandkstreet.com\/index.php?rest_route=\/wp\/v2\/posts\/677","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.wallstreetandkstreet.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.wallstreetandkstreet.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.wallstreetandkstreet.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.wallstreetandkstreet.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=677"}],"version-history":[{"count":2,"href":"https:\/\/www.wallstreetandkstreet.com\/index.php?rest_route=\/wp\/v2\/posts\/677\/revisions"}],"predecessor-version":[{"id":679,"href":"https:\/\/www.wallstreetandkstreet.com\/index.php?rest_route=\/wp\/v2\/posts\/677\/revisions\/679"}],"wp:attachment":[{"href":"https:\/\/www.wallstreetandkstreet.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=677"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.wallstreetandkstreet.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=677"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.wallstreetandkstreet.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=677"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}