The exercise here is accounting for costs and benefits external to the power producer/consumer transaction. Any costs and benefits arising from the transaction are factored into the price of electricity. If electricity allows women to participate in the work force instead of making meals from scratch, that presumably increases demand for electricity, which affects the price. In theory, the benefits that stem from people having electrical service should be reflected in the price of that service.
Accounting for externalized costs is a wholly different exercise. It's an accounting of the costs that do not arise out of the producer/consumer transaction and thus cannot affect the price of electricity through bargaining. Health costs of coal are one such cost. People bear that cost whether or not they even have electric service, and their level of usage does not affect the level of the costs they incur. This kind of cost is not priced into the price of electricity from coal. The benefit that would be relevant in this accounting is a benefit from electricity that you get whether or not you directly or indirectly pay for electricity. Your wife being able to work is not such a benefit--you only get that benefit if you pay for electricity.
Note the wiggle word both you and the poster above use: "cheap electricity" not just "electricity." It's not "electricity versus no electricity" its "cheap electricity versus more expensive electricity." The benefits from cheaper versus more expensive electricity are entirely internal to the producer/consumer relationship an are thus priced in to the price of electricity. They're not the same as external environmental costs which are not priced in to the price of electricity.
"Any costs and benefits arising from the transaction are factored into the price of electricity."
You are assuming a perfectly competitive market for electricity, in which there is no consumer or producer surplus. The parent you are replying to is essentially asserting that this is not the case in the real world - The pricing of electricity is based on a comparison of marginal values and costs, not absolute values, and thus misses the entirety of the consumer surplus (by definition). This is a positive value that belongs on the ledger next to any positive and negative externalities that is not taken into account by the price of electricity.
People bear that cost whether or not they even have electric service
Just like a child cured by Western medicine gets the benefit without having to necessarily be a consumer of electricity. When I mentioned women in the work force as a benefit, I didn't mean to the individual. I was talking about the societal advantage to having a more productive work force. That is not factored into the purchase of a KWh of electricity.
No, "cheap electricity" aren't wiggle words that describe an internal relationship. Cheap electricity was a necessary condition for the cascade of advancements we've made over the last 60 years. In this thread, I've seen the argument, "If only we had charged for externalities from the beginning of electrical generation" - as though we would be where we are today in all other areas of Western life if we had stalled the production of CHEAP electricity for 80 years while we waited to develop alternatives that were themselves predicated upon the cheap electricity we got from coal in the first place.
> I was talking about the societal advantage to having a more productive work force. That is not factored into the purchase of a KWh of electricity.
But it is. If society as a whole benefits more from electricity, their demand goes up, which raises the price of electricity. You're just trying to double-count the benefit.
> as though we would be where we are today in all other areas of Western life if we had stalled the production of CHEAP electricity for 80 years while we waited to develop alternatives that were themselves predicated upon the cheap electricity we got from coal in the first place.
The situation isn't banning the use of coal from the beginning. It's forcing the external costs of coal to be accounted for from the beginning. Economic theory tells us that this wouldn't have stalled our development.
their demand goes up, which raises the price of electricity
If that were true, then electricity should be astonishingly expensive because we use astonishingly more of it than we did 60 years ago, yet the last time I looked, inflation adjusted prices for electricity were remarkably flat.
Economic theory tells us that this wouldn't have stalled our development
What economic theory is that? Plus, if you want to compare Economic theory vs History; I'll take History. History is filled with discoveries and technology advancements that were the results of cascading advances which were the result of an advancement that made due to some basic resource becoming available and/or cheap. Advances are in no way inevitable. Advances are in no way unhindered by prices of resources.
Really what we did early on was to trade our environmental resources for cheap power. From that tradeoff, we have reaped extraordinary benefits. Why are those benefits so hard to recognize in this discussion?
> If that were true, then electricity should be astonishingly expensive because we use astonishingly more of it than we did 60 years ago, yet the last time I looked, inflation adjusted prices for electricity were remarkably flat.
So, the price of computers has gone down even with skyrocketing computer use. But nobody would say that the benefits of computers are a positive externality that isn't priced into their price.
> Advances are in no way inevitable. Advances are in no way unhindered by prices of resources.
There is a "right price" for resources. If the actual price for the resources is too high, that will retard development. If the actual price for that resources is too low, development will happen in a way that uses an inefficiently high amount of the cheap resource. The market will generally arrive at the "right price" for resources, except in the presence of externalities.
> From that tradeoff, we have reaped extraordinary benefits. Why are those benefits so hard to recognize in this discussion?
It's not a matter of recognizing those benefits, it's a matter of not double-counting those benefits.
nobody would say that the benefits of computers are a positive externality that isn't priced into their price
You're the one who said that the increase in price of a resource already accounted for its benefit to the producer. You can't use the fact that I broke your argument to then construct a straw man. Besides, if someone used the same one dimensional environmental argument against the pricing of computers (which they sometimes do), then I would be consistent in the defense of the beneficial externalities of computers.
Right there they mention "invention". My claim is that inexpensive electricity has led to many inventions because people have more time to invent and more resources with which to invent. Because of cheap electricity, we have more people alive because they could afford air conditioning and well refrigerated foods. Some of those people have invented things.
If "Invention" is a beneficial externality (or more properly has positive externalities), then the predicate of invention, "cheap electricity" is also a beneficial externality.
If the actual price for the resources is too high, that will retard development
Use of a resources normally has a critical minimum price before it's used commonly or at all. Why do you think the title of this article is "Cost of Gene Sequencing Falls Raising Hopes for Medical Advances"?
Gene sequencing has negative externalities too. There's a loss of privacy. There is a possibility that terrorists could release gene-based biological agents that could wipe out segments of societies. Should we price that into gene sequencing now "just in case"?
it's a matter of not double-counting those benefits
I could just as easily say you're double-counting the costs of electricity since society (to a small and appropriate degree) views its generation as harmful to the environment and so they already have less of a demand for it. That would be a nonsense argument to since consumers don't typically factor in non-sequitor benefits and negativities during price negotiation.
Accounting for externalized costs is a wholly different exercise. It's an accounting of the costs that do not arise out of the producer/consumer transaction and thus cannot affect the price of electricity through bargaining. Health costs of coal are one such cost. People bear that cost whether or not they even have electric service, and their level of usage does not affect the level of the costs they incur. This kind of cost is not priced into the price of electricity from coal. The benefit that would be relevant in this accounting is a benefit from electricity that you get whether or not you directly or indirectly pay for electricity. Your wife being able to work is not such a benefit--you only get that benefit if you pay for electricity.
Note the wiggle word both you and the poster above use: "cheap electricity" not just "electricity." It's not "electricity versus no electricity" its "cheap electricity versus more expensive electricity." The benefits from cheaper versus more expensive electricity are entirely internal to the producer/consumer relationship an are thus priced in to the price of electricity. They're not the same as external environmental costs which are not priced in to the price of electricity.