Human capital lacking in Energy infrastructure

(via Asymmetrical Information)

No Watermelons explains that simply "investing in the infrastructure" isn't going to get quick results, because most of the physical and human support infrastructure for energy generation has either been scrapped, gone to other fields, or retired/died. Oops.

But why should investors and managers invest the money needed to be able to take on projects like this? How will they know that they can get a return on their capital when regulations never stabilize and funding might disappear tomorrow because somebody thinks one of George Bush's associates is making too much money? We need true commitment from regulators and Congress if anything permanent is to happen.

So don't go thinking that we can just pass some laws and spend some money and everything else will fall into place. We've been dissipating our capital, labor and expertise for years through neglect and lack of investment, and it will take some time to recover.

This goes to show that capital is non-homogenous (and thus cannot be lumped together in a macro statistic as "capital stock"), and that without investment, capital is spent and dissipates. And without the potential for return, investment will be light or non-existent. Profit is not only "not bad", it's a strong signal for further investment (much as prices)- eliminating or restricting profit is the surest way to eliminate voluntary investment.

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