RP5 Energy Economics. Social Sciences Coursework.

Energy Economics
Name
Institutional Affiliation
Energy Economics
Q#1
Politicians are usually elected for short periods and have no consideration of the long-run goals as they are always focused on short-run electable issues. For this reason, I think economists should not be working as politicians as well as in the energy policy to smooth out the approach and consistently tackle the goals. This is because, in politics, efficiency does not matter so much. What matters in politics is fairness, but this approach differs from economics who value market efficiency and long-term goals. Economists are also sensitive about transition costs. The fundamental approach to prescribing policy in economics emerges from the recognition that the presence of market failures such as public goods, externalities, imperfect competition, and monopoly creates room for effectively-designed public intervention in improving social welfare. This tradition provides the basis of many policy advice given by economists. For instance, development economists in the 1950s applied ideas of market failures as an intellectual basis for the necessity of government intervention in the promotion of development in developing countries (Acemoglu & Robinson, 2013).
In most of these approaches, politics is often absent from the scene, and this neglect of politics has been justified explicitly or implicitly in three ways. First, politicians are mainly interested in the promotion of social welfare. This implies that efficient policies work to help politicians maintain their positions in power or be re-elected. Second, politics is a random factor, and politicians create a potentially severe but unsystematic grit in the process of economic policy formulation. For instance, Liberian dictator Samuel Doe’s economic policies became disastrous since he did not understand the involvement of being president. Lastly, while political economy matters, good economics is good politics; this means that good economic policies will work to relax any political constraints. It is important to support good economic policies if they will work to resolve market failures and unleash important political forces (Acemoglu & Robinson, 2013). For these reasons, economists should not work as politicians, especially in formulating energy policies, as this will hurt the process of decision-making in the long run. Since politicians are focused on short-term goals, long-term objectives such as efficiency in the energy sector will be affected if more economists worked as politicians.
Q#2
The American Climate Contract and the Green New Deal share important similarities but also differ in some aspects. Considering these two initiatives, it will be possible to include some elements in designing an effective climate bill that will get passed in Congress. Such a bill will have a bipartisan agreement and get us closer to making the lasting changes to mitigate the effects of climate change. Climate change has become the most important issue facing not only the United States but the entire world in the 21st century (American Climate Contract, n.d). The American Climate Contract suggests that the United States should advance certain policies and lead collaborative initiatives in energy i...