The following is in response to Michael Edesess’ article, Will Germany Lead the World’s Energy Revolution?, which appeared last week:
Dear Editor,
Michael Edesess’ contained a couple of incorrect factual statements. The lesser one was that Germany – at 5.3% – was getting a higher proportion of its electricity from solar than any other country. Italy gets about 6%. It has fewer gigawatts (GW) of renewable energy installed, but it has more sunshine and its economy is smaller. It’s probably only Italy that is ahead in solar – of course there should be many others.
More glaring was the claim that Germany gets “by far” the highest proportion of electricity from renewables of any country. There are a number of (all small) countries which get 100% of their electricity from renewables. There are island states getting their power from hydro. But, there are more substantial examples: New Zealand and a number of South American countries, including Brazil, get most or a large minority of their GW hours from renewables, again mainly hydro. But there is also Spain – at over 30% – including a fair amount of that from hydro, and a good amount of wind and some solar. Finally, getting free of all that hydro, there is Denmark, with about 35%, mostly wind.
Michael Gannon
Michael Edesess replies:
Dear Michael,
Thank you for your comments. You are right that a number of small countries get a higher proportion of their electricity from renewables than Germany. Iceland, for example, gets 100% of its electric power from renewables since both geothermal and hydro are counted as renewable. Nevertheless, Germany gets a larger absolute quantity of electric power from renewables than any other country if large-scale hydroelectric power is omitted.
As to the percentage of electricity generated by solar cells, I am unable to find corroboration for your figure of 6% solar electricity for Italy. But it is true that several countries in Europe, including Spain, France, Italy and Portugal also have large subsidies for solar cell arrays and have increased their solar electricity enormously. But, as can be inferred from the installed capacity figures in the BP Statistical World Energy Review 2011 and the EurObserv’ER 202: Photovoltaic Barometer,none comes close to Germany in the number of kilowatt-hours generated by solar cells.
The following is in response to Robert Huebscher’s article,Michael Pettis - Can China Save Itself?, which appeared last week:
Dear Editor,
Your article on Michael Pettis is interesting, but Pettis’ observations are both obvious and too focused on details that miss China’s underlying business problems.
China has major problems with its culture (historic corruption and tolerance of corruption), politics (centralized control) and low citizen participation rates in politics and the economy. Without fundamental reform of its monolithic government and a relaxation of its party intrusions, economic development will remain stultified, if not go into reverse. It is by no means just poverty or debt and taxes that are holding China back.
The average citizen knows he is an underachiever in economic terms, and that his salvation is in party politics or the black market economy (which is really the "crony economy")where the businessman pays his local government or its bank a share for getting contracts, land or licenses. The black market pays producers well (above over-the-counter prices in retail stores) for production of food, medicine and personal articles. At the level of local commerce, there is some price competition which benefits consumers, but it is restricted to only a small part of the total economy. It is a model of what will work, if encouraged by governments.
Stark choice confronts the average Chinese citizen – choices divide the country into fiefdoms that can provide a level of economic activity the average citizen wants. Local governments supply internal goods and services to many citizens, if not many regions, of China. Export sales are a different story. They are managed at a higher level in the party structure via the national banks of various descriptions. These banks administer the vast majority of central policy of the party. No one dares to cross the banks if he wants to remain in business and do export sales.
But the central government is torn between the need for exports and the lack of policy from the central government. The economy works today because government – chiefly local governments – want to stimulate employment regionally or in a municipal area. But export trade is not significant compared to what China's government wants and needs.
All major business sectors of export significance are approved by the central government under the party plan and administered by central bank authorities. Entrepreneurs focus on first the party functionaries (central banks and then central or regional agencies for land, labor and licenses and tax agreements. Next they seeks capitalization from internal banks or foreign direct investors and finally technology agreements and export sales (exports drive the process). Some domestic selling may also be permitted, but is carefully controlled and taxed. Little of this activity is based on supply or demand competition between business firms. It is based on at external competitors and sales.
The prevailing system is vastly inefficient and corrupt, making the local economies very uneven and different, while the export sector is not defined, except in nonpublic central plans.
The upshot is that China must rely on such things as mercantilism with its Asian trading partners who need to import goods based on their raw materials. The developed world will need China less and less since, its advantage in labor costs is largely gone, and its technology is not world class without help from outside investors. Finally, the current internal agenda centers on suppression of corruption, military development and a workable political role for China in the global economy. None of these issues involves development of modern production system.
In the end, the various regions will vie for their own development and will find the money to make the investment. The national system is going to become passé to some degree in favor of a better economy the central government does not know how to develop.
Having spent several years placing private capital in China, I saw little change over the last 10 years. But I am hopeful that the pragmatic nature of the Chinese government will allow the economy to muddle toward solutions for each of its regions. The progress will be slow, much like it was during periods of U.S. industrialization.
J.W. Carpenter, MBA, PhD.
Seattle, WA
