Category Archives: Web Article Review

cap and trade

This Greentech article has a long analysis of how cap-and-trade is likely to affect gas prices in California. The author comes up with ten cents a gallon, then explains why he thinks the higher estimates offered by the oil industry are just scare tactics. To put the ten cents in perspective, he offers the following options to offset the cost:

This is all good, common sense advice. But I would offer one more: live where you can (safely) walk or bicycle to work, shopping, recreation, and medical care. But, you say, I don’t live in a place like that. Well, you control where you live. Decide that in 5 years you want to live in a place like that, then make it happen. If enough people do that, there will be more places like that. Or if you are a truly tough-minded person, decide that in 10 or 20 years you want the place you live now to be like that, find other people who agree with you, and get out there and make it happen. You will not only reduce greenhouse gas emissions and put money back in your pocket. You and your loved ones will be at much less risk of serious injury caused by a car. You won’t drive drunk, or get run over by someone else driving drunk. Increased physical activity and decreased air pollution will add years to your life. And most important, at least to me, commuting will no longer be an enormous waste of so many precious hours of your life, but quite possibly the best part of your day.

monopoly and free markets

This article from Alternet has a nice explanation of why “free markets” in the absence of regulation do not lead to open and fair competition:

Some monopolistic industries mess around with your daily life in an obvious way, like Big Telecom bringing you the low-grade misery of shoddy service and defective products. Others fly a bit lower under the radar, like the credit reporting monopolist Fair Isaac Corp, which can blast your financial existence in a nanosecond…

What I want to see, when I look at a marketplace is: Is that market open to a newcomer?

If I want to go into the business of farming in this community, can I become an independent farmer? If I want to go into the grocery business, can I do that, is it open? If I want to bring a new variety of paint to the market, do I have a place to sell my new variety of paint? If markets are open, that’s a good thing.

What we see is that the people who have actually preached the doctrine of free markets, this last generation, when you go back and look at it historically, is that the idea of free markets really comes out of the Chicago School, the libertarian wing of academia. They were preaching free markets, but when they would preach free markets, they also preached the elimination of all regulation. But when you eliminate all regulation you end up with no markets at all, because you end up with monopolists, and monopolists are the antithesis of an open market.

This idea of markets truly open to new competitors makes a lot of sense, and it makes sense for the government to support it. However, going back to Joseph Schumpeter and his idea of “creative destruction”, there is another kind of competition that may be more important. Competition is not just about new competitors entering the market to provide the exact same good or service in the exact same way. It is also about innovators finding completely new ways to satisfy people. For example, instead of competing with existing car companies by offering a different brand of car, I can compete by inventing Uber, or a car pooling website, or bike share, or protected bicycle lanes. These are alternative ways of meeting peoples’ need and desire to get from point A to point B. Even if the car company has a monopoly on the market for cars and it is hard to enter that market, we can compete with them. In fact, if they are slow to innovate and respond to outside threats, we may be able to crush them.

This model sounds great, but there is something insidious that often happens. The monopolist, instead of responding with innovations of its own, buys political power and uses it to try to prevent others from innovating. You can see this in the fight against Uber, and Airbnb, and selling solar power back to the grid. This is what I find really shameful and undemocratic, and we good citizens should not let it stand.

grid parity

If a good indicator of grid parity is articles about grid parity, then grid parity seems to be here. This article from Renewable Energy World has a good roundup of recent articles on grid parity and the possibly dire consequences for traditional utilities.

And yet the thesis of the Renewable Energy World article seems to be that all this is overblown. Their main argument is just that people won’t switch because they are stubborn. I don’t buy that. I agree that people are not just economic robots who will do cost-benefit analysis and switch instantly, but if the economics is pushing them off the grid then resistance will gradually fade, until one day it will be a landslide. The one thing I think could slow it down would be reliability. It might be annoying and even dangerous if your entire house is giving you a “low battery” signal. Sure, you could keep a diesel generator around. But that involves storing diesel fuel. It would make more sense to just keep a backup battery. But every once in a while, that backup battery might not be enough, so you might need a second backup battery, and so on. Neighbors or whole towns could share a backup system, but then you would be starting to build a grid again. You could have a natural gas generator, but then you need to be on a natural gas grid, and if I had to choose between the electric grid and the latter I would rather go electric.

We can take it as a good sign or a bad sign that traditional utilities are starting to fight back through lobbying and through the courts. They are trying to get states (examples: Florida, Virginia, South Carolina, even Pennsylvania, ) to outlaw or limit selling energy back to the grid, on the grounds that the customers who don’t do it will then have to pay more. This is true as far as it goes – if all but a few people go off the grid, the ones who are left will be stuck paying for the entire traditional system, which doesn’t work. So as a society we can probably afford to support some early adopters, but once it really starts to catch on it’s all or nothing. Lobbying and buying off politicians might slow the tide for awhile but not forever if the forces pushing us in this direction are strong enough. The traditional utilities can either find a way to get in on the game or die.

 

more on climate change and U.S. farming

This NPR article says that climate change is allowing North Dakota farmers to switch from wheat to corn.

“Especially the increase in moisture has allowed for better yields and more profit in corn than, say, if we had some of the lesser moisture we had in the ’70s and the ’80s,” Ritchison says.

Corn and soybeans, which also like the moisture, now cover about 15 percent of North Dakota’s cropland, says Ritchison, and the number of acres keeps expanding. The Slabaugh farm is a prime example of corn’s advance. They will plant at least 1,500 acres this year — compared to none 10 years ago.

Changes in weather patterns aren’t the only reason for the move to corn. The crop is also more lucrative: Corn produces much bigger yields per acre than wheat.

All well and good for those farmers, but this doesn’t strike me as an upbeat story in the larger context. If we are in danger of losing productive farmland in many states due to a combination of heat, drought, and groundwater depletion, is it really so helpful that productive farmland in other states is now able to switch from one crop to another? Even if biotechnology helps and yields get higher, it seems like it would be a net loss. This is the United States. What is the story in the tropics, where there is generally less farmland and more people?

genuine progress indicator

Vermont is going to have a go at the Genuine Progress Indicator, a GDP alternative:

Estimating the GPI begins with household consumption, the major component of Gross Domestic (or State) Product (GDP), followed by twenty-four separate adjustments including:

  • Additions for benefits not included in GDP, for example the values of volunteer and household work, and non-market benefits from the services of forests (e.g. water purification) and wetlands (e.g. buffer storm events);
  • Deductions for depletion of our environmental assets, harm to human health, costs of underemployment, and loss of leisure time; and
  • Adjustment for the distribution of income received by citizens, more accurately measuring the ability of the economy to provide for all.

The website explains in detail how the calculations are done.

you know nothing, snow

From Wired Science:

The western United States is undergoing a major shift in precipitation patterns. Large swaths of the West that have historically been dominated by snow in the winter months are starting to see a lot more rain instead. A new study that maps out the predominant form of precipitation shows that this trend could result in an average reduction in snow-dominated area of around 30 percent by the middle of this century.

The western US depends heavily on snowpack to sustain its water supply through the dry summertime, but the new research, published in Geophysical Research Letters in July, suggests this may have to change.

Hmm…here’s the abstract of the paper…not quite so sensational sounding although it still clearly says there is going to be a lot less snow:

This approach identifies areas most likely to undergo precipitation phase change over the next half century. At broad scales, these projections indicate an average 30% decrease in areal extent of winter wet-day temperatures conducive to snowfall over the western United States.

climate change, water, and corn

Here are a couple stories on U.S. corn yields:

From the “Risky Business Project“:

Shifting agricultural patterns and crop yields, with likely gains for Northern farmers offset by losses in the Midwest and South.

  • As extreme heat spreads across the middle of the country by the end of the century, some states in the Southeast, lower Great Plains, and Midwest risk up to a 50% to 70% loss in average annual crop yields (corn, soy, cotton, and wheat), absent agricultural adaptation.

  • At the same time, warmer temperatures and carbon fertilization may improve agricultural productivity and crop yields in the upper Great Plains and other northern states.

  • Food systems are resilient at a national and global level, and agricultural producers have proven themselves extremely able to adapt to changing climate conditions. These shifts, however, still carry risks for the individual farming communities most vulnerable to projected climatic changes.

From Ceres:

  • 87% of irrigated U.S. corn is grown in regions with high or extremely high water stress, meaning there is limited additional water available for expansion of crop irrigation. The most vulnerable regions are in Nebraska, Kansas, California, Colorado and Texas.
  • 27% of rainfed corn is grown in regions with high or extremely high water stress, meaning that there is limited water available should climate change make irrigation necessary. The most vulnerable regions are in Illinois, Wisconsin and Michigan.
  • Twelve ethanol refineries above the High Plains aquifer – with nearly $1.7 billion in annual corn ethanol production capacity – are sourcing corn in areas experiencing cumulative declines in groundwater levels. Six of these refineries are in regions of extreme water-level decline (between 50-150 feet).

To me, this sounds like a lot of today’s productive farmland may not stay that way due to a combination of higher temperatures and drought. Can we really open up enough farmland and/or increase yields in “Northern States” to make up the difference? I suppose maybe there are areas of Canada that could go from ice-covered to prime farmland, as long as they stay wet enough.

Elon Musk

Elon Musk says he is trying to put people on Mars in 10-12 years, put sustainable colonies on Mars longer term as a hedge against human extinction, build cheap batteries for cheap electric cars and houses, build cheap solar panels to charge the batteries, and protect us against killer artificial intelligence. He also thinks other people should advance the Hyperloop and figure out how we can live forever. I think this is a pretty good to-do list.

more on corporate social responsibility

Just thinking some more about yesterday’s post on the profit motive and shareholder value as the only responsibilities of business. I remembered a recent interview with Noam Chomsky where I thought he explained very well why profit maximizing entities do not automatically serve the greater good:

In market systems, you don’t take account of what economists call externalities. So say you sell me a car. In a market system, we’re supposed to look after our own interests, so I make the best deal I can for me; you make the best deal you can for you. We do not take into account the effect on him. That’s not part of a market transaction. Well, there is an effect on him: there’s another car on the road; there’s a greater possibility of accidents; there’s more pollution; there’s more traffic jams. For him individually, it might be a slight increase, but this is extended over the whole population. Now, when you get to other kinds of transactions, the externalities get much larger… Destruction of the environment is an externality: in market interactions, you don’t pay attention to it. So take tar sands. If you’re a major energy corporation and you can make profit out of exploiting tar sands, you simply do not take into account the fact that your grandchildren may not have a possibility of survival — that’s an externality. And in the moral calculus of capitalism, greater profits in the next quarter outweigh the fate of your grandchildren — and of course it’s not your grandchildren, but everyone’s.

What makes the gospel of shareholder value so insidious is that it gives the human beings inside corporations a shield to hide behind – an excuse to not ask any questions about right and wrong in their daily actions. I think Milton Friedman has it right that a business corporation on paper is a completely amoral entity. Now it appears that business corporations are evolving and molding a whole new species of human beings in their image! As children we are taught to think about right and wrong every day, but then as adults we don’t have to any more. This is not human at all, and we can reject it – the managers and employees at the car companies and energy companies have a responsibility to think about right and wrong every day and to make choices that are consistent with what they think is right. If the only thing that is right is not working for that company, then so be it. Consumers can do the same. The political system can provide somewhat of an ethical framework for society from the top down, but we individual humans need to take responsibility for our daily actions and meet it halfway.