Argument against the feasibility of nuclear power

[brian0918]

Stefan Molyneux, who is a fan of Rand, and generally agrees with Objectivist views (apart from his opposition to the need for government), posted this video arguing that nuclear power would not be feasible in a totally free society, as the insurance liabilities would be too high, and he gives as a concrete example the UK in the '80s and '90s, in which he claims such a scenario occurred.

He argues that it is the government's capping of corporate liability that has allowed the nuclear power industry to be artificially created and propped up, comparing it to the liability cap that BP received in exchange for risky deepwater drilling.

Aside from the actual danger (or lack thereof) from radiation at the Japanese reactor, are there any thoughts on his arguments?

(Go to 3:00 to skip the public education example)

Edited March 19, 2011 by brian0918

[Grames]

Let the experiment be made! Remove the government supports from favored businesses and lets see what is left standing. Of course, the regulations hampering industries would also have to be removed. At a certain price point the power from nuclear energy would be profitable, but no one can know what that price is from within the current mixed economy.

[brian0918]

His argument wasn't that it couldn't be *profitable*, but that it would be uninsurable, due to the high risk and uncertainty surrounding it. He claims that this actually occurred in the privatized energy sector of the UK.

Most Objectivists have responded to the Japanese disaster by taking the opposite stance of the environmentalist hysteria, and pointing to the safety of nuclear energy. But knowledge of that safety (and how it should be achieved) has only come as the result of past disasters produced by government-created nuclear infrastructure. Current nuclear energy infrastructure worldwide is all or partially propped up by government intervention - likewise alternative energies such as coal, natural gas, oil, have been artificially hindered by government.

I guess I would have expected the Objectivist response to nuclear energy to be similar to the response to risky deepwater drilling - that they are both the result of government intervention into the marketplace, and would not have been insurable in a free market without better knowledge of the risk (which comes either from better understanding of the world, or from learning from past mistakes).

Edited March 19, 2011 by brian0918

[Grames]

His argument wasn't that it couldn't be *profitable*, but that it would be uninsurable, due to the high risk and uncertainty surrounding it. He claims that this actually occurred in the privatized energy sector of the UK.

I'm not an MBA but I'm sure there is some way to quantify the risk involved in not being insured and to compare it to the bottom line. Some risks are worth taking, others not.

Then there is the property rights angle, and why should the nuclear plant builder be the only party to decide what risk the other property owners in the area must accept? Now that there have been several nuclear plant mishaps the objections of other land owners cannot be dismissed as irrational fears. The common law property dispute doctrine of "coming to the nuisance" applies, and the nuclear plant builder should get the permission of all the land owners in a certain radius of the plant location. If that makes a certain location not feasible, tough for the builder. I rule out liability caps and "eminent domain" powers on behalf of a private business as theft.

[softwareNerd]

But knowledge of that safety (and how it should be achieved) has only come as the result of past disasters produced by government-created nuclear infrastructure.

Is this really true? The starting point is to know what the material can do, and what it cannot do. I figure scientists had a good understanding of these and also of ways in which a "worst case" scenario could be prevented. I don't know about the history of nuclear reactors, but I wouldn't be surprised if the first experimental ones were smaller and further away from population centers, and I assume that many lessons from experimental reactors were incorporated into the first commercial ones. According to the Wiki, partial core meltdowns have been numerous, dating all the way from 1952. According to the Wiki, the only two pre-Japan meltdowns that happened in modern countries were Lucens, Switzerland (1969) and Three Mile Island (1979). The evidence seems to indicate that the third-party costs of these two were minimal. We'll have to see how Japan plays out, but it seems that a similar outcome is likely. Still, the important point is that it was knowledge of the capabilities of the material, and knowledge of the capabilities of other materials, and knowledge of human error, and planning of possible failure... all taken together which prevented those past incidents from being so benign.

If nuclear plants are uninsurable, what about hydro-electric dams (there have been incidents where a few thousand people died) and chemical plants (think Bhopal, India). When people think of a nuclear accident, they're assuming that the "tail-risk" is unlikely, but the costs of that tail risk are mind-boggling.

I think the really hard part is to reach an objective legal measure of the degree of risk one may legally pose to others regardless of cost. This is an issue of law quite apart from just nuclear reactors: what types of risk can one impose? in particular, what types of "tail risk" are legal? what levels of third-party coverage insurance must one have?

On the limited liability thing, I didn't listen to the video, but rich businessmen have gone bankrupt throughout history. So, even without limited liability, there would probably be some profit-point at which a partnership would be willing to risk their personal wealth, and also be able to pay premium rates to non-owner lenders.

[brian0918]

I guess I'm more interested in why the response by Objectivists to the BP spill has been different from their response to the Japanese reactor accident. The rebuttal to the environmental hysteria after the BP spill was to say that risky deepwater drilling wouldn't have occurred in the free market, without government manipulation of the markets.

The latest response to the environmental hysteria from the Japanese reactor is to say that nuclear energy is actually *safe* - but that doesn't make it any more right, or any less the product of government manipulation than deepwater drilling.

If the goal is deregulation, the proper argument should be two-pronged: show why the hysteria is unfounded, and also show why an accident was (at least partially) the result of government manipulation of the market. But I have only seen the former, not the latter.

In this specific case, one could argue a nuclear reactor in a region that is densely populated, and lies on an active fault line, would have been the least feasible location in a free market.

Edited March 19, 2011 by brian0918

[softwareNerd]

I guess I'm more interested in why the response by Objectivists to the BP spill has been different from their response to the Japanese reactor accident. The rebuttal to the environmental hysteria after the BP spill was to say that risky deepwater drilling wouldn't have occurred in the free market, without government manipulation of the markets.

Who was saying that? Was it the stance from ARI? (BTW: Not rhetorical or challenge questions; just simple ignorance from not following commentary by Objectivists). When it comes to the Oceans, there is a pretty big need to define legal rights in a better way. Of course the fluid nature of the sea makes it tricky, but one has to come up with some practical rules. On the face of it, I don't see why deep-water drilling would not happen in a free-market.

Perhaps the point that people were making is that deep-water drilling would not yet be happening, because companies would be allowed to drill in less deep water, and to drill on more places on land. The same argument does not seem to apply to nuclear plants: i.e. the argument that they are a costly alternative that companies are forced into because the government has cut out cheaper avenues.

If the goal is deregulation, the proper argument should be two-pronged: show why the hysteria is unfounded, and also show why an accident was (at least partially) the result of government manipulation of the market. But I have only seen the former, not the latter.

In this specific case, one could argue a nuclear reactor in a region that is densely populated, and lies on an active fault line, would have been the least feasible location in a free market.

I agree that would be the right approach, if it is true, and if people can make the case that it is true.

[brian0918]

Perhaps the point that people were making is that deep-water drilling would not yet be happening, because companies would be allowed to drill in less deep water, and to drill on more places on land.

Yes, that is the argument I was referring to. I have made that argument repeatedly, and have seen it made by others. I found this video from ARI in which Yaron Brook makes the same argument:

http://www.youtube.com/watch?v=zukp_N7Mchs

The same argument does not seem to apply to nuclear plants: i.e. the argument that they are a costly alternative that companies are forced into because the government has cut out cheaper avenues.

Why doesn't it apply? If nuclear energy is not actually a costly alternative, then why the need for government subsidy and cap on liability?

[softwareNerd]

Why doesn't it apply? If nuclear energy is not actually a costly alternative, then why the need for government subsidy and cap on liability?

It is possible that nuclear is costlier. Of course, one would need a bit of expertise to weigh the government subsidies in the different areas and the government restrictions in those areas. The reason it does not seem that way to me is the way it was widely adopted all over the world. Still, once it is all untangled, it is possible that it is cheaper only if other sources are not readily available, or only under certain assumptions about risks. Basically, I think it is very hard to speculate because different government rules might have resulted in some smart inventor coming up with a solution in an area where the company can otherwise rely on a government "bailout". There is a parallel to banking etc. here, where banks actually had to unlearn smart practices of the past and change their "technology" so that it was more profitable under the government-backed regime, even though the total risks increased. In principle, the government needs to establish laws about third-party risk, and then it needs to get out of the way.

A similar argument can be made against cars: are they really cheaper than railroads or does it only look that way because of the tax-money spent on roads? But, then what about the government pressure used to get railway right-of-way? However, if the governments got out of the freeway business, would private toll-roads do something different (even if it was a focus on profitable routes) to make cars and trucks more competitive. one can make an attempt to work out the subsidies and cross-subsidies and the rules that burden businesses with extra costs. Ultimately, one would probably be just making a plausible guess, because the entire industry might look different without government subsidies and costs.

I just remembered one little fact that was reported regarding Japan: that the politics of the past few decades has curtailed the development of new sites for nuclear plants. It has been easier to get permission to build more reactors at existing sites. This increases the risks resulting from a natural disaster that hits a specific site. If this has been one of the results of government policy, then it would be an example of government policy pushing a poorer alternative.

[Tanaka]

He argues that it is the government's capping of corporate liability that has allowed the nuclear power industry to be artificially created and propped up

I think his definition of what liability is would be very different from ours. I don't understand where he is getting the notion that nuclear plants are causing massive liabilities for their owners.

The proper liability of nuclear plants, in a Capitalist political system, is the damage they cause in the case of accidents. Since nuclear power is the safest form of energy production in the history of the free world (both to human life and to property), the price of insurance against liabilities from accidents would be smaller than pretty much any other business's.

From the way that argument is phrased, I don't think he even understands that the source of any liability is the government, in the first place. That without government, there would be no legal liabilities for screwing up. There would be no laws.

[CapitalistSwine]

I have found some interesting information on the cost issues regarding nuclear power that I will post in here later today or tomorrow that can give us a better idea of exactly what the issue may be. I am not sure if this would be changed by the stripping of inappropriate government intervention in the economy or not. Either way, apparently nuclear battery stations are starting to come into the fray and they are much cheaper than nuclear plants and thus more economically feasable.

[blazingtruth]

I'm personally not opposed to the building nuclear plants, especially in a laissez-faire O'ist society. To say that you cannot build nuclear plants because a meltdown may occur and harm a wide range of individuals is the same as saying you cannot build a skyscraper because it may collapse, or any other invention because there's the possibility of malfunction.

In the hands of private individuals, the cost of building nuclear plants and the liabilities in the event it does malfunction would be the responsibility of the private individuals/corporations. The economics would all work itself out because the individual would ensure it gets worked out, working in his rational interests. Further, it's not as if the corporation would necessarily be alone and fully liable in rebuilding the nation because of a natural disaster. Victims of a natural disaster realize it's not the fault of the nuclear plant owner if a meltdown occurs because of an earthquake, and they will take it upon themselves to rebuild their own households. When it comes to natural disasters, no single individual can be held accountable. When it comes to accidents like the BP oil spill, BP must be held accountable since it was a fault of their own; however it may very well be in the interests of the direct victims to assist in rebuilding.