An even briefer summation of 2007

[Roxanne Appleby]

Not really, because I'll only strum a few chords, not the whole song. Some comments and predictions:

Global warming - Whether or not you think it's a huge problem, minor problem or a scam, it's hard to characterize the hype of the past year as anything other than hysterical. Al Gore's movie will come to be viewed as embarassing. GW has recieved pretty much an uncritical free ride in the media, but now that it's been adopted as establishment doctrine that will begin to change. I predict that we've seen the high water mark of GW hysteria.

Energy will remain a genuine challenge, however. Politicians and "rent seekers" will continue to exploit it with bad ideas like ethanol and subsidies that will fund a lot shysters but produce little of real use. I predict that over the next 50 years the world will transition to an all-electric economy with a lot more nukes and new concentrated energy sources like geothermal electric generating plants.

The War - Bushies like to brag that "the surge" worked. Did it, or did the country just arrive finally at a point of exhaustion? The latter seems more likely. Naturally it's good that the violence has ebbed, but it's hard to be optimistic about the future of the country currently called Iraq, and those who inhabit it. More broadly, Huntington's "war of civilizations" will continue, but whether it will play out as chronic low-grade violence, all-out war or something in between is anyone's guess.

(reposted from that other thread) A prediction: Most states that enthusiatically banned homosexual marriage in a wave of demagoguery and opportunistic political exploitation will become increasingly embarrassed by the ban. It will be hard to repeal in most states, though. But this cheap political game has had it's day and probably no new states will adopt the ban. Just the opposite - some will begin to legislate homosexual marriage (not impose it through counter-productive judicial fiat). These states will become magnets for a highly productive and generally affluent population segment, and the marriage-ban states will suffer from that.

Prediction: Whoever becomes president will preside over the creation of something that will be called "universal health care," but won't really be in the sense of Canada or Europe. The current private insurance and provider system will remain, and be augmented by something that looks a lot like Medicaid extended to a larger portion of the middle class. The hallmarks of system will be dishonesty, disappointment and busted budgets. Honest liberals should be careful what they wish for in this policy area. There are some serious problems with the current system that make it politically unsustainable, but given the realities of the American political system and political culture the outcome of the probable "fix" won't be pretty. Too bad, because there are innovations and genuine reform ideas out there, but most of them will be trampled by the politics of the thing.

~~~~~~~~~~~~~~~​

OK, while outrageously opinionated and provocative hopefully none of that is gratuituously hostile to those with different views . I may add some more, and invite others to post their own opinionated and provocative summations and predictions.

 

[Roxanne Appleby]

Oops, I forgot one: The levitation trick that was double-digit annual increases in U.S. (and U.K.?) home prices came back to earth. As with most unstainable financial trends when they stop going on forever, politicians are seeking to exploit the issue by "arresting the usual suspects" - in this case the home mortgage industry, which the worst proposals would essentially destroy. More seriously, the bubble-pop revealed a lot of outright chicanery in the sub-prime market by both lenders and borrowers. Most of those hurt were people looking to get something for nothing, speculators of one sort or another banking on the "greater fool" principle (there will always be a greater fool willing to pay an even more inflated price) - a characteristic typical of all financial bubbles. There are a few genuine victims - benighted ignoramuses who were sold a bill of goods by unscrupulous slicksters. Not that many, though.

The event is causing a reexamination of the liquidity-creating machine that are modern financial markets, and the degree to which central banks really control the amount of "money" in circulation.

Here's my prediction: Whatever gyrations may still occur in the world financial system, there won't be a "depression" or anything like that (unless politicians and governments really go nuts with awful policy on a number of fronts - finance, trade, energy, "global warming"), because the underlying reality is that the world economy continues to become ever more productive, create ever more real wealth, and expand the opportunity for ever more people previously living at subsistence level to gain very basic middle class standards of living. Hundreds of millions of people in Asia and India are enjoying really signifigant improvements in their material well being - it's a wonderful story that does not get told and celebrated nearly enough.

 

[Pure]

Whoever becomes president will preside over the creation of something that will be called "universal health care," but won't really be in the sense of Canada or Europe. The current private insurance and provider system will remain, and be augmented by something that looks a lot like Medicaid extended to a larger portion of the middle class. The hallmarks of system will be dishonesty, disappointment and busted budgets.

HillaryCare is not something that gratifies anyone who sees how Canada, or France or Finland works.

Americans pay high prices for many things. E.g. their senate.

 

[gauchecritic]

As with most unstainable financial trends when they stop going on forever

Now. Bear in mind that the housing market is a microcosm of free trade and monetarist policy and follow that thought.

 

[Roxanne Appleby]

Now. Bear in mind that the housing market is a microcosm of free trade and monetarist policy and follow that thought.

Alright.

In the U.S. (and UK) most families own their own homes. Most of those homes are quite comfortable, and most people in the world would sell their mothers to enjoy a comparable standard of living. Building, furnishing and maintaining those homes is a major industry that provides millions of jobs and creates much real wealth. The quality of America's housing stock improves every decade.

Many people view homes as an "investment," which they are to some extent, but mostly they are a form of consumption. In the last five years there was an unsustainable increase in the price of homes, largely driven by speculation and fueled by excess liquidity. Some lenders and some borrowers got burned by the excesses, but for the vast majority the event was a meaningless blip. Within a couple years the imbalances will be corrected, and the "supertanker" that is the U.S. economy and housing industry will placidly sail on into the future.

In 50 years most of those homes will be heated and cooled by electricity from nukes and geothermal plants rather than natural gas or fuel oil.

Not a bad system, I'd say.

 

[gauchecritic]

Alright.

In the U.S. (and UK) most families own their own homes.

I'd really like to see those statistics. And then can you hunt up the statistics about how many of those people have lost their homes?

Many people view homes as an "investment," which they are to some extent, but mostly they are a form of consumption. In the last five years there was an unsustainable increase in the price of homes, largely driven by speculation and fueled by excess liquidity.

Which meeeeans?

Some lenders and some borrowers got burned by the excesses, but for the vast majority the event was a meaningless blip. Within a couple years the imbalances will be corrected, and the "supertanker" that is the U.S. economy and housing industry will placidly sail on into the future.

Ok onto what the question was about in the first place. Microcosm. Free trade. I'll add in another phrase made famous by somebody that had no idea about what their policy would actually lead to: Domino effect. The blip isn't over. It's just submerged until the spin doctors get hold of it again to fire at the opposition on where tax money is being spent.

In 50 years most of those homes will be heated and cooled by electricity from nukes and geothermal plants rather than natural gas or fuel oil.

Not a bad system, I'd say.

since you included the UK at the beginning, I'll include it here. The UK is actually looking at plans to build offshore windfarms which will supply the entirety of electrical energy consumption. So, no nukes I'm afraid. And geothermal energy is pie in the sky for investment run industry.

 

[Roxanne Appleby]

I'd really like to see those statistics. And then can you hunt up the statistics about how many of those people have lost their homes?



Which meeeeans?



Ok onto what the question was about in the first place. Microcosm. Free trade. I'll add in another phrase made famous by somebody that had no idea about what their policy would actually lead to: Domino effect. The blip isn't over. It's just submerged until the spin doctors get hold of it again to fire at the opposition on where tax money is being spent.



since you included the UK at the beginning, I'll include it here. The UK is actually looking at plans to build offshore windfarms which will supply the entirety of electrical energy consumption. So, no nukes I'm afraid. And geothermal energy is pie in the sky for investment run industry.

I won't take the time to root around for a completely satisfying response, but will say the following. The home ownership statistic is in the 70-percent + range. The majority are single family homes, but many are condos. I don't know what the median or average debt-to-equity ratio is, but suspect it's better than detractors would find useful, and not as good as I would prefer (maybe I will look that one up).

Meaning of investment vs. consumption? I dunno - just a word to the wise, I guess.

Domino effect? Sorry, but the magnitude of the event isn't nearly enough to stess the system into the Great Proletarian Revolution. It's a blip, Gauche. It's revealed some imbalances, and over a couple years they will have been worked out. As always, the real danger is exploitation by politicians, and the resulting destructive public policy. Given that the cardinal rule of American politics is Don't Piss Off the Middle Class, odds are we dodge that bullet.

If wind farms turn out to be economically viable without subsidy and capable of supplying the magnitudes of energy required, and of doing so without a parallel backup system (probably nuclear) that essentially makes the windmills nothing more than an aesthetic sop to the "green" affectations of post-modern populations, wonderful. I'll believe it when I see it, and celebrate the event. You might take a closer look at the magnitudes of energy potentially produced and what's needed before getting too enthusiastic, however. If "entirety of electrical energy consumption" includes some "given a 90 percent reduction in demand due to conservation" small print, it ain't gonna happen, my friend.

Geothermal a pipe dream? Well, it would use lots of pipes. Seriously, perhaps it is, but I don't see any insoluable obstacles, and I think it's capable of producing the magnitudes needed. I'll apply the same standard - if it's viable without subsidy, woo-hoo. If not, screw it. I'm content to let the market sort that out. One advantage over your wind farms - it doesn't need back up, because the heat is always "on" down there.

 

[Oblimo]

I don't know what the median or average debt-to-equity ratio is, but suspect it's better than detractors would find useful, and not as good as I would prefer (maybe I will look that one up).

I urge you to do so, because ownership %s are meaningless without knowing what debt-to-equity is, since it's the d-2-e that's going to determine whether the US banking system is going to collapse or not.

 

[Iconoclast99]

Global warming - Whether or not you think it's a huge problem, minor problem or a scam, it's hard to characterize the hype of the past year as anything other than hysterical. Al Gore's movie will come to be viewed as embarassing. GW has recieved pretty much an uncritical free ride in the media, but now that it's been adopted as establishment doctrine that will begin to change. I predict that we've seen the high water mark of GW hysteria.

I beg to differ on the hysteria characterization. This is not like predictions of millennial end times by a few oracles reading entrails or bones or old books. I, and many others, see a majority of scientists saying that to the best of their knowledge certain forces are in play which will eventually lead to catastrophic consequences for human civilization and the whole earth ecosystem. A much smaller number of scientists say "It's all smoke and mirrors. No need to worry."

If we were talking about a majority of scientists saying that they have discovered a planet-killer sized object hurtling in from the Oort cloud and that their best calculations predict that it will smash into the earth in fifty years I think that I would listen to them and spend time and money to search for ways to prevent or mitigate that catastrophe. I would not be prepared to listen to a smaller group of scientists who say that there are always space objects flying around and harmlessly falling into Jupiter, so there's no need to decrease our standard of living just yet. Later, maybe, when more facts are in.

I do not expect to live long enough to see either the climate change scenario or the hypothetical killer asteroid but I, in a completely non-hysterical way, want to protect my children and grandchildren.

Energy will remain a genuine challenge, however. Politicians and "rent seekers" will continue to exploit it with bad ideas like ethanol and subsidies that will fund a lot shysters but produce little of real use. I predict that over the next 50 years the world will transition to an all-electric economy with a lot more nukes and new concentrated energy sources like geothermal electric generating plants.

I agree that ethanol, from what I have seen, is a bad idea and probably counterproductive. I don't find much hope in nuclear or geothermal either. Where I do see hope is solar power. See the cover story in the January issue of Scientific American. Will there be con artists and graft and corruption? Undoubtedly. Is it worth the cost? Yes.

Iconoclast

 

[Roxanne Appleby]

I beg to differ on the hysteria characterization. This is not like predictions of millennial end times by a few oracles reading entrails or bones or old books. I, and many others, see a majority of scientists saying that to the best of their knowledge certain forces are in play which will eventually lead to catastrophic consequences for human civilization and the whole earth ecosystem. A much smaller number of scientists say "It's all smoke and mirrors. No need to worry."

If we were talking about a majority of scientists saying that they have discovered a planet-killer sized object hurtling in from the Oort cloud and that their best calculations predict that it will smash into the earth in fifty years I think that I would listen to them and spend time and money to search for ways to prevent or mitigate that catastrophe. I would not be prepared to listen to a smaller group of scientists who say that there are always space objects flying around and harmlessly falling into Jupiter, so there's no need to decrease our standard of living just yet. Later, maybe, when more facts are in.

I do not expect to live long enough to see either the climate change scenario or the hypothetical killer asteroid but I, in a completely non-hysterical way, want to protect my children and grandchildren.


I agree that ethanol, from what I have seen, is a bad idea and probably counterproductive. I don't find much hope in nuclear or geothermal either. Where I do see hope is solar power. See the cover story in the January issue of Scientific American. Will there be con artists and graft and corruption? Undoubtedly. Is it worth the cost? Yes.

Iconoclast

The problem with such confident assertions of global warming disaster is that the evidence is extremely ambiguous at best, so anyone who speaks with such certainty risks being perceived as either trying to jerk somebody's cord, or of having had their own cord jerked by someone else.

We're certainly not going to settle it here, but before continuing to make assertions of such unbridled certainty you might want to at least consider what climatologist John Christy said recently about what he calls GW "hubris," or atmospheric scientist Roger Pielke Sr. on the mislabeling of sensitivity studies as "global climate models" by a signifigant subset of the scientific community who are operating with with an inherent and undisclosed conflict of interest. Bjorn Lomborg is hardly a "denier," but his more nuanced analysis of the rational allocation of scarce resources as part of a more balanced response should be sobering to those in Kyoto or Bali who would hamstring the world economy to bring about what their own predictions show to be absolutely negligible results.

BTW, on what basis do you "not find much hope in nuclear or geothermal?" What distinguishes both from solar is that they are capable of generating the magnitudes of energy required by an industrial civilization. Whatever promise it may hold for niche applications or marginal reductions of the quantities that need to be generated by nukes or geo-plants, solar does not have that potential. Recognizing the magnitudes is the key - and that's what's always left out of articles and discussions of so called "alternative" energy.

 

[Pure]

rather than rehash 'global warming' and the alleged 'hysteria,' which hasn't moved many legislators.

fortunatetly a number of the practices that are said to produce global warming are bad for a number of reasons. burning large quantities of oil or coal are bad for lots of reasons; besides pollution, the problem of supply, etc.

deforestation produces deserts, and eliminates cropland.

polluting practices are bad for lots of reasons, e.g burning leaded gasoline. a problem not solved in the alleged 'free market.'

"everthing is fine. plunder the planet. treat all resources as inexhaustible; throw the tailings/refuse anywhere convenient," that philosophy can't stand even if 'global warming' were not a problem.

it causes apoplexy on the right, but 'corporate responsibility' will be coming in. there are CEOs that realize it's not a commie plot.

 

[Iconoclast99]

The problem with such confident assertions of global warming disaster is that the evidence is extremely ambiguous at best, so anyone who speaks with such certainty risks being perceived as either trying to jerk somebody's cord, or of having had their own cord jerked by someone else.

I made no assertions, confident or otherwise, about global climate change. I merely objected to your"hysteria" characterization by pointing out that my opinions are based on the large consensus of scientific opinion and my desire to protect my progeny. If the scientific majority are wrong and I am wrong then we will have spent time and money arguing about nothing. If you and the small group of naysayers are wrong, then my children and grandchildren will pay the price. I'm not prepared to take that risk. By the way, you can also find and quote a small group of credentialed scientists who dispute the theory of evolution, but I long ago gave up listening to their arguments.

BTW, on what basis do you "not find much hope in nuclear or geothermal?" What distinguishes both from solar is that they are capable of generating the magnitudes of energy required by an industrial civilization. Whatever promise it may hold for niche applications or marginal reductions of the quantities that need to be generated by nukes or geo-plants, solar does not have that potential. Recognizing the magnitudes is the key - and that's what's always left out of articles and discussions of so called "alternative" energy.

Well, geothermal works very well in Iceland because the whole island is one big volcanic vent, but I question the cost of generating plants and drilling operations. Also, there is some question that Geothermal is really a renewable energy source, and the government of Iceland has so stated.

Nuclear doesn't fly for me because of the problem of nuclear waste disposal and the disastrous consequences in the case of a small chance of reactor failure.

As for magnitudes, there is some interesting work being done in Bavaria right now on Solar power generation. I'll have to get some time to read the Scientific America article http://www.sciam.com/article.cfm?id=a-solar-grand-plan to see what it says

Iconoclast

 

[Roxanne Appleby]

I made no assertions, confident or otherwise, about global climate change. I merely objected to your"hysteria" characterization by pointing out that my opinions are based on the large consensus of scientific opinion and my desire to protect my progeny. If the scientific majority are wrong and I am wrong then we will have spent time and money arguing about nothing. If you and the small group of naysayers are wrong, then my children and grandchildren will pay the price. I'm not prepared to take that risk. By the way, you can also find and quote a small group of credentialed scientists who dispute the theory of evolution, but I long ago gave up listening to their arguments.



Well, geothermal works very well in Iceland because the whole island is one big volcanic vent, but I question the cost of generating plants and drilling operations. Also, there is some question that Geothermal is really a renewable energy source, and the government of Iceland has so stated.

Nuclear doesn't fly for me because of the problem of nuclear waste disposal and the disastrous consequences in the case of a small chance of reactor failure.

As for magnitudes, there is some interesting work being done in Bavaria right now on Solar power generation. I'll have to get some time to read the Scientific America article http://www.sciam.com/article.cfm?id=a-solar-grand-plan to see what it says

Iconoclast

OK, fair enough on my deliberately provocative use of the "H" word.

However, the kinds of policies promoted by Kyoto and Bali are hardly without cost. As Lomborg points out, they fail even the loosiest-goosiest type of cost-benefit analysis, even by the standards they themselves set. Such economically destructive policies will have a greater impact on your grandchildren than the relatively modest effects that responsible GW advocates suggest are possible. Ocean level increases over a century that are barely more than the rise in the last century, for example. Easily mitigated problems whose solutions are orders of magnitude less costly than kyoto and bali "solutions."

The scientists who demur from the GW "concensus" (not a very scientific concept, that, is it?) are not remotely comparable to anti-evolution nut-cakes. Condemning them as such without even looking at what they say is the sign of a closed mind. With respect, and apologies for not saying so more tactfully.

The nuclear waste problem is more politics than physics. Check out this post. The hundreds of third and fourth generation nukes under construction or being designed around the world today are light years ahead of the first and second generation "kludges" people in the U.S. are familiar with in both safety and efficiency.

Geothermal is speculative, but it certainly is "renewable" - the earth's core will not be cooling any time soon (soon being like in the few hundred million years). That's just plain physics. Drilling down and sinking pipes to capture some of that heat is hardly rocket science. Whether it's cost effective remains to be seen, but the concept is sound, and the potential magnitudes of energy it can produce make it worth pursuing.

I'll check out the solar article - thanks.

~~~~~~~~~~~~~~~~

Oops - just peeked at the solar article, and the first paragraph talks of "$400 billion in subsidies over 40 years."

Here's what's wrong with that: How do the politicians writing the checks know that this is the best alternative? Answer: They don't and can't.

Here's how to solve that problem, though. Forget the subsidies. Instead, just gradually phase in constantly increasing, revenue-neutral carbon taxes. Offset the increased revenue with income tax rate reductions, and provide means-tested refundable tax credits (or "prebates" if you prefer) to hold harmless the poor and lower end of the middle class. The higher costs (and certainty of ever higher future costs) will provide all the incentive needed for private investors and entrepreneurs to discover which alternatives are the best bet - solar farms in the desert, nukes, geothermal, etc. They'll do it without a dime of tax money, with far less waste, and with no unproductive "rent seeking" slicksters corrupting the political process with skewing the economy with phony gimmicks like ethanol.

 

[Pure]

a couple comments:

who are 'rent seekers'? (some types of 'bad guys' in RA's world, i gather).

lomberg. i find it interesting that the better informed critics, --e.g roxanne-- turn to Lomberg the old line was 'global warming is not happening.'; after that it was 'human caused global warming is not happening.'.

Lomberg, from what i gather says, "OK, there's human caused global warming to some extent and other caused global warming, but the money spent 'fighting' could be better spent elsewhere, even looking at 50 years up the road. fighting AIDS, for example, or ensuring clean water."

This is all well and fine, PROVIDED the arguer really does favor funding a fight against AIDS. I fear some on the right, e.g. some of the Bush crowd, are half hearted AIDS fighters at best. Hence, for them, the Lomberg line, "better fight AIDS than global warming" is pure hypocrisy. what they mean is 'don't interfere with the 'bottom line' of the oil industry'.

 

[Lisa Denton]

Geothermal is speculative, but it certainly is "renewable" - the earth's core will not be cooling any time soon (soon being like in the few hundred million years). That's just plain physics. Drilling down and sinking pipes to capture some of that heat is hardly rocket science. Whether it's cost effective remains to be seen, but the concept is sound, and the potential magnitudes of energy it can produce make it worth pursuing.

You are right Roxanne, as a energy PRODUCING source it might be speculative, but you hit dead on with geothermal as what may be one of the greatest energy SAVING sources.

I have been doing research, related to some real estate data I was crunching. With a minimal investment, almost any, and that could also mean every, home in the US could save 10 to 40 percent on heating and cooling costs with a small geothermal adaption.

Simple piping, laid down in the ground and having the air running through that has been proven to be effective, damned effective, in helping to heat the home in winter and cool the home in summer. Some new ideas have emerged, such as a slight slant to the pipes to keep condensation from building up, and a fan system to push the air through the geothermal pipes have made this what I believe will be an energy revolution in the coming years.

New home builders love the data, but don't want to spend the investment without a guaranteed market awaiting the idea. Who cares, the home owner with a small yard can in two to three days and with as little as 3000 dollars install his own pipes and have the system running. Of course my state texas is a little to far south to make the cooling in the summer work well but a pipe network laid six feet down in any back-yard elsewhere in the US is going to produce instant results.

I love this idea, and what has been accomplished in the field in th elast 6 months to year as far as improving it. When the idea becomes widespread as an energy SAVING source then the thought of geothermal on a much larger scale, for an energy PRODUCING source, will no longer be speculative.

Imagine if 50% of american homes installed this system during the new year, would anyone call this small geothermal energy savings "speculative?"

I think you called it right on with geothermal definately worth looking into.

JMO

 

[gauchecritic]

Except that, as far as I can tell Lise, that's not geothermal in the classic sense, that's using the heat put in to the earth by the sun. More a kind of solar exchange system than geothermal.

and the amount of land required (I seem to recall something like twice the footprint of the house being served) just isn't available in any kind of city environment.

 

[SlickTony]

and the amount of land required (I seem to recall something like twice the footprint of the house being served) just isn't available in any kind of city environment.

Nope, and not many volcano vents under Florida, either.

 

[Lisa Denton]

Except that, as far as I can tell Lise, that's not geothermal in the classic sense, that's using the heat put in to the earth by the sun. More a kind of solar exchange system than geothermal.

and the amount of land required (I seem to recall something like twice the footprint of the house being served) just isn't available in any kind of city environment.

No Gauch, really. I mean you might be right about what to call it but those figures of needing lots of land are studies done to heat/cool the house completely with this system.

Plus when you are using the cooler ground six feet down to help cool the house in the summer I dunno if you would call that solar.

The latest idea ONLY works using a small system, too much piping blows its advantages away with the fans needed to push the air through. This will work in 90% of US homes right now and read again what I said, a under 3000 dollar investment. Then a 10 to 40% reduction in energy to heat/cool the home. Its designed to work with a small yard area and only to work with your already working heating/cooling system.

They were doing it on like 100 homes in each area for testing and seeing dramatic results. The different temperatures in different areas have a large effect but almost every one was seeing a savings to pay for installation in the first year. Your electric bill is MOSTLY the heating/cooling of the home.

Since it works with your already installed system all that is necessary is the piping and a fan system. Your heating/cooling system reads the air temp and doesn't need to heat/cool much at all. Often merely using the fan on your heat/cool system is all it needs for most days in most temps, without the heating or air conditioning parts of your system ever needing to come on. Then in extreme weather conditions your system does exactly what it already does, with help from this.

I will look for the install stuff which I seem to have filed away, and I file everything under M for miscellaneous, but they said most home owners can rent a ditch digger thingie, and install this to thier heat/cooling system in two days. The piping is six feet down and doesn't affect anything like garden or grass after install. It had a problem with condensation build up during cooling, which was solved with a slight slant in the piping for run off into your house draining pipes.

Many homes were seeing much larger savings, like a 50% reduction in heating/cooling costs.

Its going to take off, an idea that saves that much money is one even the idiots need to look at, and talk about environment friendly.

No animals or forests were harmed during the making of this post.

 

[Handprints]

I urge you to do so, because ownership %s are meaningless without knowing what debt-to-equity is, since it's the d-2-e that's going to determine whether the US banking system is going to collapse or not.

For the UK (from memory - I'm not back at work yet) the total value of private housing stock is about GBP4tr and total mortgage debt is about GBP1.3tr.

That said, I'm a lot more interested in the ability to service debt than the debt itself: I'd like to know, for both the UK and the US, what percentage of mortgages in issue are for more than four times household income. If I get a chance later this week, I'll look it up.

Best,
H

 

[Pure]

huh?

RA Here's how to solve that problem, though. Forget the subsidies. Instead, just gradually phase in constantly increasing, revenue-neutral carbon taxes. Offset the increased revenue with income tax rate reductions, and provide means-tested refundable tax credits (or "prebates" if you prefer) to hold harmless the poor and lower end of the middle class.

The higher costs (and certainty of ever higher future costs) will provide all the incentive needed for private investors and entrepreneurs to discover which alternatives are the best bet - solar farms in the desert, nukes, geothermal, etc. They'll do it without a dime of tax money, with far less waste, and with no unproductive "rent seeking" slicksters corrupting the political process with skewing the economy with phony gimmicks like ethanol.

Under step one, the gov't plans to get the same amount of tax, but from more 'carbon tax' than 'income tax.'

Those can economize and who care to, will, reducing revenue to the go'vt (unless you jack their income tax back up).

The rich will take some obvious economies, and reduce taxes to the gov.

The poor do nothing, except try to get more fuel efficient cars, which aren't available at a good price.

So the gov't begins LOSING revenue. Perhaps this is general encouragement to investors, but that effect does not necessarily center on alternative power. See below.

NOW, Rox says
The higher costs (and certainty of ever higher future costs) will provide all the incentive needed for private investors and entrepreneurs to discover which alternatives are the best bet

Well, it's unclear how her tax scheme would affect costs, but yes, costs do rise (regardless of tax policy). Which raises the question, why bother with her tax scheme. OK, it's so the the middle segment economizes on fuel, uses less. However, see below:

What's the impact of less use? Well, ideally, in a free market, the oil companies would REDUCE the prices and people would seize on them, and INCREASE use again.

IN the real economy, with oligopoly, the Oil cos. can do the opposite and raise prices to increase revenue to older levels.

In the 'real economy', not the Rand fantasy, the consumers will find their bills going up by at least the amount saved through economy.

The average fellow cuts his gasoline usage from 50 to 45 gallons per month, but he now has to pay the same price for the 45 gallons. I suppose he may try fresh economies, but those have the same effect. ODD position for the middle class guy. Note that he doesn't have a cent more to buy a more efficient gasoline-using car, or to buy a battery one.

*NOW, in this climate, with oil cos. revenue constant or increasing, INVESTORS are supposed to invest in geothermal processes? (MORESO than they would otherwise?) Why not simply buy more oil stock?
Why would they invest in geothermal?

It seems pretty clear to me, a lay person, not an economist, that Roxanne's scheme counts on increasing the incentive to invest, but that's in no way linked to the alleged 'carbon tax'. There's no reason to suppose the investment picture will change [[i.e. because of her scheme]]. IOW her hope of [stimulating] massive, unsecured private investment in geothermal, or whatever, has no rational basis. PUTTING it another way, MAYBE some investors WILL turn to geothermal, but they likely would have anyway.

In short, the scheme is based on hope and faith. The evidence is that the free market is risk averse. There is a reason why govs. have had to subsidize alternate sources. I will bet that even Iceland did NOT develop geothermal on a private, unsecured basis. As with the 'net, the 'free enterprisers' wait till the gov' has provided startup and reduced risk, then move in for more reliable gains.

I suppose the more religious persons who endorse RAs scheme can turn to prayer, to secure the positive outcomes. RA herself has simply to hope.

 

[Roxanne Appleby]

For Pure, from Wiki:

In economics, rent seeking occurs when an individual, organization, or firm seeks to make money by manipulating the economic and/or legal environment rather than by making a profit through trade and production of wealth. The term comes from the notion of economic rent, but in modern use rent seeking is more often associated with government regulation and misuse of governmental authority than with land rents.

Rent seeking generally implies the extraction of uncompensated value from others without making any contribution to productivity, such as by . . . imposing burdensome regulations or other government decisions that may affect consumers or businesses. While there may be few people in modern industrialized countries who do not gain something, directly or indirectly, through some form or another of rent seeking, rent seeking in the aggregate may impose substantial losses on society. Often-cited examples include a farm lobby that seeks tariff protection or an entertainment lobby that seeks expansion of the scope of copyright.

Or an incumbent coal-burning utility that seeks a cap-and-trade regime that converts something it already does into an asset, to the disadvantage of any new competitors even if they are much more efficient.

To Lisa, Slyc and Gauche on geothermal: The heat pumps are indeed neat energy-saving devices. Apparently the capital costs are such that they aren't quite cost effective given recent natural gas prices, but at a certain price point it's likely they would take off. Inherent limitations do make them energy savers, though - instead they are supplements to some other source.

The kind of geothermal I'm thinking of is sticking a loop of pipe like 12,000 feet underground where it's really, really hot, pouring water down one end, and spinning turbines with the steam that comes squirting out of the other end. That electricity can be shipped all over through wires, and can run cars, factories, heat houses, etc.

 

[Roxanne Appleby]

RA Here's how to solve that problem, though. Forget the subsidies. Instead, just gradually phase in constantly increasing, revenue-neutral carbon taxes. Offset the increased revenue with income tax rate reductions, and provide means-tested refundable tax credits (or "prebates" if you prefer) to hold harmless the poor and lower end of the middle class.

The higher costs (and certainty of ever higher future costs) will provide all the incentive needed for private investors and entrepreneurs to discover which alternatives are the best bet - solar farms in the desert, nukes, geothermal, etc. They'll do it without a dime of tax money, with far less waste, and with no unproductive "rent seeking" slicksters corrupting the political process with skewing the economy with phony gimmicks like ethanol.

Under step one, the gov't plans to get the same amount of tax, but from more 'carbon tax' than 'income tax.'

Those can economize and who care to, will, reducing revenue to the go'vt (unless you jack their income tax back up).

The rich will take some obvious economies, and reduce taxes to the gov.

The poor do nothing, except try to get more fuel efficient cars, which aren't available at a good price.

So the gov't begins LOSING revenue. Perhaps this is general encouragement to investors, but that effect does not necessarily center on alternative power. See below.

NOW, Rox says
The higher costs (and certainty of ever higher future costs) will provide all the incentive needed for private investors and entrepreneurs to discover which alternatives are the best bet

Well, it's unclear how her tax scheme would affect costs, but yes, costs do rise (regardless of tax policy). Which raises the question, why bother with her tax scheme. OK, it's so the the middle segment economizes on fuel, uses less. However, see below:

What's the impact of less use? Well, ideally, in a free market, the oil companies would REDUCE the prices and people would seize on them, and INCREASE use again.

IN the real economy, with oligopoly, the Oil cos. can do the opposite and raise prices to increase revenue to older levels.

In the 'real economy', not the Rand fantasy, the consumers will find their bills going up by at least the amount saved through economy.

The average fellow cuts his gasoline usage from 50 to 45 gallons per month, but he now has to pay the same price for the 45 gallons. I suppose he may try fresh economies, but those have the same effect. ODD position for the middle class guy. Note that he doesn't have a cent more to buy a more efficient gasoline-using car, or to buy a battery one.

*NOW, in this climate, with oil cos. revenue constant or increasing, INVESTORS are supposed to invest in geothermal processes? (MORESO than they would otherwise?) Why not simply buy more oil stock?
Why would they invest in geothermal?

It seems pretty clear to me, a lay person, not an economist, that Roxanne's scheme counts on increasing the incentive to invest, but that's in no way linked to the alleged 'carbon tax'. There's no reason to suppose the investment picture will change [[i.e. because of her scheme]]. IOW her hope of [stimulating] massive, unsecured private investment in geothermal, or whatever, has no rational basis. PUTTING it another way, MAYBE some investors WILL turn to geothermal, but they likely would have anyway.

In short, the scheme is based on hope and faith. The evidence is that the free market is risk averse. There is a reason why govs. have had to subsidize alternate sources. I will bet that even Iceland did NOT develop geothermal on a private, unsecured basis. As with the 'net, the 'free enterprisers' wait till the gov' has provided startup and reduced risk, then move in for more reliable gains.

I suppose the more religious persons who endorse RAs scheme can turn to prayer, to secure the positive outcomes. RA herself has simply to hope.

Pure, with respect, there are a number of errors in your economic analyses, and it will take time to pick through them one by one, which I may do, but not right this minute. Also, my very capsulized description of this regime has led to some misunderstandings. When I say "the certainty of ever increasing fossil fuel costs" that means increasing carbon tax levels. I picture something like an annual increase of 15-cents to 25-cents US per gallon of gas equivalent.

Here is what I believe is the fundamental flaw in your analysis, and it may be a philosophical difference, but there's so much economic evidence in the affirmative that it really should not be: You are using static analysis, and this proposal is based on dynamic effects. Static means no one changes their behavior except to suffer more if you''re a consumer, and to profit more if you're an incumbent energy producer (although your analysis of that appears to have holes in it too). The static view ignores the effects of innovation and competition, which create countless "unintended" positive consequences that no one can predict. (Of course they are intended, though.)

What this plan does is use taxes to change the fundamental calculus of energy consumption vs. conservation, and thus greatly increases the incentives to conserve, innovate new conservation technologies, and develop new non-carbon energy sources. It changes the calculus gradually but with certainty and predictability, so people have time to adjust and innovate.

The offsetting tax cuts and credits means that the carbon tax itself does not impose any new burdens on any segment of the population. The gradually increasing need to adjust behavior and consumption patterns - isn't that what you want? - does impose burdens, but with the increased innovation the higher cost generates this will probably be much less than one would predict. With a growing economy the transition costs to the new consumption vs. conservation calculus could be absorbed with no one having to sacrifice their standard of living.

I'm not trying to pull a fast one and "starve the big government beast" with declining tax revenues. Yes, carbon burning will decline but the tax rate on that burning will increase. I'll let you set the revenue-neutral tax level (with adjustments for inflation and population growth.) The balance between the amount of offsetting income tax rate reductions that compensate the more affluent and the tax credits (or "prebates") that compenstate those below median income (who currently pay very little income tax) will be determined in the usual political tug-o-wars, and no one will be happy, which shows balance has been acheived.

A (relatively) unfettered dynamic economy characterized by competition and choice yields positive "unintended" consesequences through unpredictable changes in behavior and innovation, and this demands dynamic analysis to understand. Adherents of static analysis call that "voodoo," and instead assume little unpredicted innovation, and privation as the only "behavior" change. The preponderance of evidence from economic history shows that the dynamic outcome is more plausible to such an extent that, and as I say, this should not even be a matter of poltiical or philosophical differenc

 

[manyeyedhydra]

I predict that we've seen the high water mark of GW hysteria.

The biggest problem is everyone's conditioned by the media to fear some big global catastrophe or other.

It won't be like that.

What we will see is the slow but steady erosion of the quality of life we're used to now as resources we take for granted become scarce. We'll also see a lot of wars in less developed areas of the world as people fight for these resources. These will be blamed on on religious differences etc, etc and the US and UK and other first world countries will build bigger fences to keep them out.

Um, kind of what's happening now I guess.

As a sort of example, weather reports in the UK now also include details of how bad the air pollution is in each area. 20 years ago that would have been seen as something out of a science fiction comic like 2000AD.

But then a hundred years ago the London smog could probably kill you, so I guess you could take either side.

Personally I think we're only partially f**ked. If it gets really bad we'll have a big war, loads of people will die and a lower population will right the situation.

Depressing, but that's kind of our history in a nutshell.

 

[manyeyedhydra]

Many people view homes as an "investment,"

Call me dumb, but I never really got the logic as to why the same bricks and mortar should be expected to go up in price above inflation year after year...

But then I studied a biology degree and I've always thought biologists and economists is like the Pirates vs. ninjas thing.

 

[Pure]

note

RA What this plan does is use taxes to change the fundamental calculus of energy consumption vs. conservation, and thus greatly increases the incentives to conserve, innovate new conservation technologies, and develop new non-carbon energy sources. It changes the calculus gradually but with certainty and predictability, so people have time to adjust and innovate.

The offsetting tax cuts and credits means that the carbon tax itself does not impose any new burdens on any segment of the population. The gradually increasing need to adjust behavior and consumption patterns - isn't that what you want? - does impose burdens, but with the increased innovation the higher cost generates this will probably be much less than one would predict. With a growing economy the transition costs to the new consumption vs. conservation calculus could be absorbed with no one having to sacrifice their standard of living

RA: in general, you points in the rest of the post are entirely abstract. my analysis is not 'dynamic' enough, compared to yours, which you don't offer.

i do see that you're trying to encourage conservation, but it's in so hesitant a way, i don't see it working. for example, you give no reason NOT to expect that joe blow's reductions in gasoline won't be compensated in higher prices.

you are so leary of the dreaded 'tax increase' that you can only hint that up the road the overall tax paid will indeed be greater, and not 'neutral' with respect to the person's taxes.

your analysis entirely ignores vested interests. EVEN ASSUMING conservation occurs, and ASSUMING oil prices don't go up, you seem to picture the oil companies, among the most powerful of corporate interests, being subject to decreasing revenues, and celebrating for the health of the planet, that there is now geothermal energy development.

and you haven't answered the basic question of why investers would go, under your plan, towards geothermal risk moves, instead of the simple expedient of betting on Standard Oil.

yours statically,
j.

PS. Isn't this whole tax scheme, assuming it works, fundamentally opposed to 'free market' and 'limited government.' you're apparently, by a kind of "commmand," pushing people to burn less gasoline and natural gas, by lowering their tax if they do.

surely your philosophy dictates that you let them buy all they want, at the going price. and indeed, reduce gasoline taxes to the minimum, to give them more 'freedom' to buy more. eventually, as supplies are less available in 50 years, the price will be so high as to 'take care of' the problem. (e.g. put the gasoline automobile, if it exists, out of the price range for the ordinary person.) surely you have faith that 'the free market' solves all conservation problems, as for example with hardwoods from the US: as the supply disappears, no one can afford it, and the remaining resource is let alone while another source (e.g. indonesia) is found. eventually the market too, will "solve" the problem of Indonesia's forests. there won't be many, and it won't be economical for NAmericans to buy that wood either.