Comment by teyc
4 months ago
why does this arbitrage exist? Why is the cost of energy, the fundamental input into every economy, cheaper in Asia? Tractors consume fuel, fertilisers do too. Human labour is the least efficient at converting fuel into energy. When you dig a little deeper, you'd find an economy structured around keeping rentiers away from the basics: housing, energy and food.
Energy doesn’t come from just raw materials. It takes extraction, refinement, transportation etc in the case of petroleum, or manufacturing, installation etc in the case of wind and solar.
If you mean in terms of general economics, why are some countries cheaper than others, I’m not really qualified to make a statement there. I’m also not talking about if it’s right or wrong. But it is the reality today.
Don’t you think if we understand why energy, the fundamental unit of economics is lower in China we can gain much insight into the rest of the economy? Economists have often praised an energy tax for its non distortionary effect.