Yanis Varoufakis: Power, Markets & Power Markets - Ep104 

Yanis is such a clear thinker and such sound concepts….need leaders like him….Thanks for hosting Yanis

Great discussion and thanks for having Yanis as a guest - his systems view, macroeconomic, and game theory background is amazing and hopefully we can figure out ways to make our systems sustainable and workable for all people.

"The state comes into create a market that fails, and then comes into regulate it. That's madness." Yanis.

Agree with Yanis. Trying to privatise such massive an hugely important facility like energy or health is just going to impede social benefits with the profit motive. In terms of public services providing innovation please remember that Alan Turing, the father of the modern computer, worked for the Post Office.

Excellent discussion gentlemen. To my mind the foundational premise should be Need/Want based. Want fullfillment , by human nature, quickly outstrips need fulfillment, once the Individuals needs are met. And from there, many seek to 'Corner' Resources over and against others, effectively 'enslaving' them. Also problematic, becomes the passion to Strip resources Brutally, at high speed with intent of 'Eternal' procurrement (a grotesque indulgent fantasy at best). Very quickly gaps develop into Haves/Have Nots of a Class based society, upon which all forms of Exploitation are affirmed. Wants, Resource allocated, should not be allowed by a society to outstrip the basic needs fullfilment of its citizens or to work against a Life Giving Biosphere. As well, the idea of Endless Possesion/Consumption is a Contortion which mutilates and abuses the "Social Contract" This kind of Stress and Destruction CANNOT be practised if we are to fullfill potential evolution of our species. However, it is my fear in the dark recesses of my own humanity, that we may not be able to maximize an Escape Velocity sufficient to leave our Greed in the rear view mirror. Regards, Viet vet/Ecologist VFP

In Poland we have time of day tariffs for electricity. This is my answer to the host’s question: “name one outside of UK”. Poland of all places.

Yanis is a national treasure

Yanis is awesome. Especially when he is being unimpressed!!

Yes, Yanis. Spot on. We don't need all of this "control your thermostat from your phone" crap. UK households' energy prices have just DOUBLED when we've seen a huge increase in millionaire and billionaire wealth. That's the innovative thing that I care about. The current economic system is destroying the world.

Behind Yanis there is a beautiful nord stage piano

Go Yanis! Very calm and rational response to a religious non- believer

Yanis is correct here; markets are good for some things and not for others. The production and distribution of energy is included precisely in the latter category. Forcing middlemen at every step into the system - all of whom must demand their cut - in order to simulate a market will require future, more technically advanced generations to fully appreciate the absurdity and inefficiency of this phenomenon (like we can look back now at the true absurdity of mesmerism despite even people like Alfred Wallace falling for the nonsense at the time). Assuming we don't blow ourselves up in the meanwhile. Anyway, I find it humorous Michael's unstated implication that bright people cannot be hired by the publicly owned utility (or perhaps intelligence is created by energy markets).

Very engaging and stimulating discussion. Thank you.

Phenomenal interview as always, was looking forward to these two big egos having a discussion and I was not disappointed! As I’ve said before and as you mentioned, video is soooo important to better understand the dynamics, I really could feel you and Yanis having lots of fun while disagreeing but also agreeing on a lot! I think a one-day workshop with you two (and Greg Jackson) in one room working on an ideal electricity system would be absolutely epic! I would pay to watch that on a live stream!!! One point that was only touched upon but not explicitly talked about is, where does competition actually happen? Just ask yourself, what is the difference between SSE, EDF or RWE running a 600MW gas-fired power plant? Maybe one does it with a 35 man (and woman) team. And the other needs 37. So lets say 200k in labor costs difference. This is absolutely nothing compared to the fuel costs. The competition that is responsible for the great technology advances is actually in the manufacturers of the power generation equipment. It is Siemens Gamesa and Vestas one-upping each other on the biggest rotor and biggest generator for offshore wind generators. It is (was) the fight between Mitsubishi, GE and Siemens on getting 1%-point higher efficiency of their gas-turbines each generation. As Michael rightly pointed out, there are special skills in developing generation projects, and there are definitely good and bad ways to procure equipment and manage the construction. However, those skills could be outsourced or just properly done by a state-owned power generation Co. I think at the end the only place where innovation can come from (aside from the equipment manufacturers) is companies like Octopus who then optimize the use of the electricity if that electricity is sometime in scare supply. Arguably though, Greg could just head a department at the National Generation Co which is responsible for demand side optimization hard and software and you might get similar results as what Octopus was doing. On second thought, seeing how Octpus is pushing heat pumps, and seeing how much of government in the UK (and Germany) don’t understand heat pumps, maybe it is good for Greg to not be a bureaucrat…. Again, the more I think about it, a (in person) meeting between Yanis, Michael and Greg would be just absolutely mind-blowingly epic….

Yanis is so right.

Best episode in a while, finally a polarised debate, I missed that. Managed to listen to the whole thing despite how irritating I found listening to the nonsense of Varoufakis' pseudo analysis. Proposing both a centralised and a decentralised energy system in the same interview was the best example of doublethink I have witnessed in a while. The spiel on EDF is pure comedy! One sentence after the other putting EDF both as an example of technology innovator and "profiteer" at the expense of other countries' nationalisation programmes... divine.. Can't wait to hear his populist thoughts around EDF's nuclear (centralised) programme. Thanks Michael for this episode!

Great discussion. Take a look at South Africa and then Russia. The link is good engineering. In my experience.

Yanis is right. In China electricity is provided by a national owned company and it works quite well. The price is cheap and it functions stably. Internet is provided by national owned companies as well, but you can choose among several. I used to live in the U.S. and internet companies there is terrible. It took forever for ATT or Time Warner to set up my internet.

Imo, Michael thinks an earring on the pig turns it into a unicorn.

Yes Yanis is right, time to blow up this unfair current system

We in Telangana State in India have government owned coal mines, power generation units, solar power (private) and hydro (government owned and managed) and with reforms we have corporatised structures of generation companies distribution companies etc. We subsidize power for low i come people and farmers. We also have net meters where we as homes can let home solar units to give power into network. Like Yanis said no big deal.

Great

Let's use South Africa as an example of exactly how disastrous unbridled state monopoly of power supply can turn out to be. Eskom, South Africa's monopoly power generator utility, bulk generates and bulk supplies many of South Africa's municipalities at a discount. There are however some towns and villages that are supplied directly by Eskom. Municipalities then resell their bulk supply to residence within the municipal area at a very much inflated cost. They justify the inflated cost by stating that part of that revenue is used to supply free or discounted electricity to qualifying poor households. Furthermore, the revenue received is used to fund the running of the municipal electrical network. Yes, Eskom only supply up until its substations and from there the municipality is responsible for electrical feed direct to households. It is well known that municipal employees across the board earn greatly elevated wages and salaries than what is earned for the same level of work in the private secure. So what we end up with is works that deliver suboptimal work effort in way of services to the communities. What all of this ends up achieving is run away cost inflation across the entire economy. Strangely those town and villages that are fortunate to receive electricity supply direct from Eskom are not subjected to additional cost hikes imposed by municipalities. So there is a us and them situation in which the exists a potential favoured demand for residential property in areas that are serviced directly by Eskom. So to cut the long story short, we have local government policy that justifies utility (all utilise: water, waste removal, licence fees and electricity) prices inflation because they have a mandate to uplift those previously disadvantaged under Apartheid. All of this on paper sounds wonderfully egalitarian and socially just BUT all that really occurs is that South Africa has created a 'fat cat class' of overpaid underpreforming local government employees that enjoy state subsidised healthcare, sick leave and pensions across all levels of the state workforce. This bloated state sponsored workforce numbered 1.3 million employees in national and provincial government in 2019/20 financial period who received R567 billion in compensation. The state is the largest employer in South Africa. The excess generated by this bloated state apparatus results in a continuous base price inflation within the greater economy. Power being a massive contributor to that inflation. At the end of the day there is less employment within the private sector and an ever growing level of entrenched poverty. Despite the excessively high electrical prices, South African have been suffering power outages to deficits in super generation for almost two decades. So think twice before you hand over the total responsibility to the state to supply electrical services.

If gas sets the price there is no competition. Germany that uses a lot of gas does not have to compete with Spain that uses a lot of renewables and little gas. Prices should be set in each country as average cost plus small margin and import and exports at the maximum price on any county in Europe. This would favor competition.

Watch Episode 32 of Cleaning Up with Greg Jackson, CEO of Octopus Energy, here: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-x9kHNMyH7bw.html Read Yanis' response to Michael's takeaways from the episode here: www.yanisvaroufakis.eu/2022/11/01/should-electricity-markets-be-reformed-or-disbanded-my-debate-with-michael-liebreich-on-cleaning-up/ And Michael's response to Yanis' response (!) here: drive.google.com/file/d/1Ra5-C56VYqfkTI9ylkPtOkcpFncOsTYG/view

In India in some states we do have power in public sector. So that some sections like farmers can get free or cheaper power and poor can get cheaper power.

Has TOU pricing just come to the UK...it has been a regular part of pricing in the US for decades. Did I misunderstand something at 20:57?

I agree the biggest problems of our day is created by all these middlemen. Whether in energy markets, services market, health market, reliant on online middlemen apps, plugins, etc etc etc etc. These middlemen create one thing, useful when we like being less active socially, physically and mentally, and profit immensely and infinitely, by making life impossible without these BS gadgets that need no further work or effort, yet generate and syphon all economy!!

It's crazy how this man, Mr. Liebreich, seems to have invested so much time into NOT seeing any real solution to climate change solely because of ideology, it seems

Nebraska USA has OPPD, a public subdivision of the state. Works the best. 5 states in the USA setup this way.

im in complete agreement with varoufakis .. this idea that 'innovative clever rich people' are better at managing our common resources and communities is an ideology that has proved itself to be nothing but a free for all for a bunch of greedy egotists ..there is no efficiency from privatization , as we were all told...instead their is catastrophe for the ordinary person .. humanity can and has managed itself in systems of care and we can do it again , perhaps we need to distract the childish billionaires and their entourages and minions with some shiny objects so ordinary people can get on with creating functional communities .. i'm so fed up with patronizing ordinary people and pretending these entitled wealthy have some greater level of value to contribute to society .. its idiotic narcissism

Michael Liebreich is a brilliant mind and an excellent debater.

India has delivered the ‘boring, etc etc”….Utilities whether power, water, etc need to be publicly owned….Yanis is correct- the ideology of ‘private sector knows it all’ is funded by private sector lobbyist….bailout after bailout of sectors says it all….time stamp-50 onwards says it all…

Michael, have you eat Chomsky explain what is Regulation Capture? This is the method the the corporations disarm regulation. It’s actually so easy for them to do this. So now we know and have the language to explain why regulation is not the solution we once thought it was.

The statements Yanis makes around 43:00 (''not after all singing and dancing'') is surely where the government needs to take the energy market. We need availability, cheap, green and to do it quickly. Innovation around a stable base load and the opportunity to reduce one's own costs, sure......but not at the expense of the basic principles.

A mjor problem is data fragmentation. Whether for or against markets, they cannot intervene in spot situations which occur once every blue moon. These do exist and can down a grid (e.g. unexpected control oscillation, plus other situations) - but they are rare so offer little ongoing $$ incentive for a market, plus may need data from around the grid in "unexpected" places. Traditionally grid stability and protection engineers have thought about these. How can a market sping into existance and correct something unexpected?

A light comes on when the rates go y

I wish I could hire Yanis to run my clown enterprise. This guy does nothing but come with pure logic, and facts.

"We need privatised services because they will come up with things we don't need" is a condemnation of an ideology, as duly noted by Yanis.

I think I get Yanis idea in juxtaposition with Mike's internet example: probably some innovation did come out of that massive buying of modems, borrowing to create the infrastructure etc. But if the innovation in electricity is as marginal as smart meters and apps that gamify consumption, as well financial bets (marketing too being very much a financial bet), surely it has not earned them the "right" of paying close to zero for their inputs and getting paid max for the output. I don't which genius designed this system anyway (revolving door energy consultants perhaps?), but in a more rational semi-nationalized electricity system then the public would indeed absorb the cost of expensive "system stabilizers" like gas, but would be paying close to zero for half of their energy. I'm only halfway in the discussion, so I don't know to what extent EU "free market" pressures created this mess, when it's obvious there's not enough energy routes to make this a balanced EU-wide market.

We had cheaper electricity starting in the evening 21:00 untill 07:00. Ex Yugoslavia. And you talk about genuinity? Jeees.

verofakis knows his shit .. who wans the middleman!?

EDF provides time of day

Empire can only be empire by consuming more energy than it produces

Funny the discussion about Liz Truss, she didn’t last long lol.

The longer something exists, the more exploited/exploitive it becomes. This is the same for national and private industries. Private is naturally exploitive and national naturally exploited. Neither work, therefore the question is: How do we stop the exploited/exploitive in the system

Liquid Floride Thorium Salt. The cheap, safe, way out.

Liebreich wants his Lear jet. The rest is yak yak yak

The way I see it is, if you have publicly (owned by the people) monopolies without shareholders profits removed, profits can be plowed back into making the organisation work more effectively and efficiently, making it affordable for many and reliable, profiteering always injects instability. This is why the Tories are trying to destroy the NHS an organisation paid for the demos (N.I.) by introducing private companies that inject instability.

All innovation is done by small companies where a bunch of people cooperate and co-own to come up with a great idea. After that they are purchased by big companies. The idea that innovation happens in privately owned large enterprises is totally bonkers.

Transnational political parties, Yanis? You know that we know that is another step toward one-world government, don't you. Though I have learned a lot from your videos, I would not be persuaded to go along with that, ever.

Clearly the Interviewer is ideologically biased. He just cannot go beyond his ideology that PRIVATE IS BETTER. We have great systems to deal with complexity. It has nothing to do with private ownership. In fact all of the research is done in the public sphere. The same as Amazon does it. The issue is who owns it? We the people or a single billionaire

Pan-European movement? Isn’t that the EU? Or is the EU in need of reform

agile prices a innovation? my mum allways forced not use the dish machine before nine o clock because its cheaper and that i 20 yrs ago…. in switzerland, where state is running electricity.

Say what you will about Yanis’ social views but he simply doesn’t understand enough about the energy industry or is wilfully forgetting or unaware of the history of power systems. To think somehow that a vertically integrated government owned utility that controls all aspects of the electric system could possibly wrangle with, or even could be sufficiently incentivised to deal with the complexities of today’s grid is nonsensical. Yes we ultimately want a simple product, electricity that is always there, but the immense complexity behind providing that product is now far too much for one entity to possibly control adequately. His example of AMAZON, one of the most fundamental examples of rampant capitalism and “privateering” (to use his words) which could only exist because the incentives exists in capitalism and the profits that can be extracted by exploiting your workforce enables such an entity to exist, is somehow something a government entity could ever be is laughable.

We have ISRO which sends satellites It is a public sector organisation.

Apart from being really mistaken about so many things, Varoufakis is such a hypocrite!

I really like Yanis as a thinker and politician, but his entire premise here is wrong. Although the electricity grid is a natural monopoly, electricity generation and retail not. That is why in Europe the unbundling of the electricity sector was implemented: to separate natural monopolies (transmission grid, distribution grid) from competitive markets (electricity generation and retail).

Did NASA send astronauts to moon or GE??

WTF you blow up Nordsream and blame Putin

Host talking more than the person invited to talk?

I alway like discussions with Yanis but he can be incredibly wrong. When you recommend governmentization of a ulitity in this case you are giving it to the people who screwed it up. The change would be only the illusion of progress. The UK is in dire need of good management and stewardship. UK can't manage Brexiit, trade, railroads. And you want to give them Utilities? Tom Nevling

LOL. It's much deeper than electricity. It's all futures. It's all a transfer of wealth to finance/monopoly.

I am amused by the desperate dodging of the point Yanis is making with the Amazon example, pulling out an example of "a different Amazon" that is entirely unrelated to the point which is that the computation problem that supposedly undermines the idea of central planning is very clearly proven immaterial by the real-world existence and functioning of massive companies like Amazon, Walmart...