Energy debacle demonstrates the danger of group gullibility

Hendrik Gerritsz Pot’s c.1640 painting, Flora’s wagon of fools, mocked the tulip madness.

In 17th-century Holland, the most valuable commodity around was a tulip bulb.

By 1610, history tells us that a single bulb of the variety “Tulipe Brasserie” was exchanged for a brewery in France. And they say there was only one Alan Bond.

This short, sharp era of micro-agricultural madness is referred to in history books as Tulip Mania, but I prefer the unpronounceable “Dutch Tulpenwindhandel” to describe the speculative, frenzied trade in tulip bulbs that reached its height in Holland between 1633 and 1637.

The skyrocketing price of bulbs led to ordinary families taking out insane mortgages to trade and hedge and, well, we don’t have to go too much further to see where it ended up.

The market crashed, as markets do, be they stock, crypto or tulip. Overnight ruin fell upon ordinary Dutch families who’d had a crack at punting the market.

As much as this story is a weird, wonderful if not slightly niche part of history, it’s also a study in human behaviour. The concept of perceived value versus actual value. The propensity of humans to believe what we want to believe, and to see the same.

It’s a character trait as old as time itself, individually and ­collectively. A kind of peer group pressure that feeds on weapons-grade gullibility.

Look no further than the breathtaking disintegration of the crypto exchange FTX. The world was so quick to embrace the feel-good juju peddled by this baby-faced wunderkind with the terrible haircut who dressed like nobody owns him. Did anyone really believe the fairy tale?

Sam Bankman-Fried convinced those who should know better, who should have asked harder questions, that his company was “for purpose”. Sure, if that purpose was allegedly to use investor’s money to buy himself expensive real estate and bankroll a bunch of political candidates.

Closer to home, the stakes are just as high, but the currency isn’t dodgecoin or bitcoin – it’s ­policy. It’s Australia’s ­future, and the threat of gullible groupthink looms large.

Enter, energy policy. The Albanese government made a promise at the election to lower the cost of power for everyone by several hundred dollars per household. Not even a year into its term and that promise is well and truly broken. Labor’s answer to affordable, reliable power is to impose insane price caps on private enterprise, then compensate them to the tune of billions of dollars of our money. Meanwhile, our household power bills continue to rise.

It’s quite the achievement of this Labor government to hand big business more of our tax dollars in compensation than they pass on to us in savings.

And yet some still refuse to question the whole screaming rush towards decarbonisation, rather than a steady, measured approach that also includes planning for nuclear.

Sam Berridge, who manages the Strategic Natural Resources Fund at Perennial, says price caps have failed as a mechanism in every single country that has tried to impose them.

“They fail because the cost of maintaining the cap (in either direction) simply becomes too great for the government (which ultimately pays for it) to bear. Add to that, for the gas industry, it’s the longer-term implications of what the government means when it talks about ‘a reasonable return’,” Berridge says.

“Industry will pause investment until it understands the detail, and fair enough. Who is going to invest a billion dollars of your money into a risky enterprise when you don’t know what return you’ll be allowed to make on your risk and your dollars?”

Independent senator David Pocock, whose vote was crucial to the Albanese government getting its energy plan through parliament, was the embodiment of buyer’s regret in the days following, complaining that nobody told him about it.

Welcome to the big league, kid. It’s called politics and it’s grubby.

The government calls it a reasonable price cap on an important household expense. In that case, let’s do milk, bread, fuel and let’s throw in school fees too, for good measure. What could possibly go wrong?

The government’s approach to energy also dismisses nuclear as too expensive, and because it will take a decade to bring online. I don’t know about you, but I think a billion dollars in compensation or thereabouts is a very costly way to keep prices high and to justify what is, frankly, rushed and terrible policy.

Every sensible person wants the cleanest, greenest most sustainable energy mix possible. Every sensible person knows that transition cannot be rushed. Furthermore, any government that isn’t thinking and planning a decade ahead in critical areas like energy and infrastructure is being negligent.

None of us can afford the luxury of blessed ignorance. We can’t afford to approach important conversations on issues such as energy, the Indigenous voice to parliament, education, any of it, by just accepting the vagaries and the obfuscation of a federal government that so far, has proved scant on detail.

It’s the vibe of the thing, they tell us, channelling their best Dennis Denuto from the Australian movie classic, The Castle.

Want detail on the voice? This government thinks you’re morally deficient for asking.

So, what about our part in this – yours and mine? Perhaps, given recent events, we need to assume the role of the Senate. Keep the bastards honest. Ask hard questions of our local MPs. Demand answers. Engage. Be heard. Lift the bonnet. Kick the tyres.

Whatever you’re comfortable with, do it, and do it as if the future depends on it. It does.