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Socs 325 - Making Markets Work

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Jeffery Persons


Making Markets Work

        How markets work is about the potential or a correctly used market potential versus allowing the market to run away and causing misuse and abuse by natural greed. In the 1980’s it is said the market looked toward on what was tangible and could be taken and used to make a profit without regard to the long term or how it affected the entire planet. Although, we sometimes forget this has been going on for centuries just not in reference to the more recent industrial age. In the past during the ideas of life and liberty were foreign ideas unless you lived within a certain class. Slavery was common practice for most societies and the usage or large amount of natural materials to build pyramids, great walls, gold covered churches to name a few. They had no care of the world’s resources which fostered the basic building blocks for the beginning of neoclassical economics.  Today’s market as talked about lists the thought that energy efficiency would in theory save trillion per year but the cost effectiveness of the swich over is still being slow to be realized. The simple point to this being in order to accomplish this there is a cost output which would affect or appear to affect the profit and companies are slow to say they are willing to take the hit now to save more in the future. What they fail to overlook and is pointed out is that saved overheads quickly add back to profits and can look a lot bigger then initial thought. My thought is it is the same as when you are looking at something as simple as light bulbs and saying should I pay more now to potentially save money in the future. Since you can’t see the future you think you will save but you currently know you will save if you by the cheaper lightbulb. However, what some don’t take into effect is the even monthly saving per kilowatt hour that you will save and how quickly multiple lightbulbs can compound to the savings. The same can be said about solar if you assume that it’s expensive and don’t look into it you don’t realize that even the cheaper 5kw systems can cut your utility bill in half divided out monthly you end up saving quite a bit, but it does take time. As the article pointed out, one employee found a way to save about $3.50 per square feet adding 3.5 million to the bottom line. This was only a small fraction and at first did not look like much. However, after pointing out that the company owned over 90 million square feet worldwide that the company could boost its net earnings by over 56 percent. Massive unrealized gain and decreased greenhouse footprint. Realizing the lack of understanding on a corporate level in 1997 the U.S Department of Energy in association with top finance firms joined up to create the International Performance measurement and Verification Protocol which has gone on to be adopted by over 20 other countries!  Unrealized gains run rampant throughout all level of corporations and government and even the slow approval process can cost upwards to 3,000 per day in lost savings. Simply labeling light switches so people knew what could and could not be turned on without messing anything up saved almost 30,000 in the first year. However bureaucracy can still destroy these efforts by intentionally keeping budgets separate and not allowing crossover as in one budget could purchase a cost savings light bulb and in quantity could save x amount but was disapproved because the amount would be distributed to all plants. They wanted each plant to purchase using their own budget even if it meant a higher per light cost resulting in what is described as bizarre behaviors. I personally have experience this when ordering parts. I can order from a set government site and do very little paperwork but in order to find a different place even if it’s cheaper I have to have 3 different quotes from three different places. So in order to save them money I have to do three times the work? This is one area in which the regulatory comities have some work to do although overall forcing the government to adhere to certain standards have saved according to the article over half a billion a year and a ten million ton a year carbon savings, although this article is a little old and I would be curious to see if it was actually correct. I do like the refrigerator example and having just purchased a new house it was one of the things we looked for was updated appliances. Sometimes you forget the difference between the old appliances and the new but I was given a kegerator that was made from an older refrigerator and after using it for only a month saw the electric bill almost double from its use. Newer and more efficient appliances easily pay for themselves along with drastically reducing environmental impact.



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