I've talked about this before.. It's not that hard an argument, but it seems like almost nobody gets it. So I'll try once more.
Businesses survive or die based on costs and revenue--usually sales. If costs exceed sales, they die. If sales exceed costs, they can grow, or they can bank the excess against weaker times. So anything a business can do that reduces costs without reducing revenue is good for them.
Most businesses are in competition with each other. Apart from the direct competition against others selling similar products, even if they don't have competing products, they are competing for resources and for their customer's limited money. Simplistically put, this is a zero sum game: in order for one business to gain, another has to lose. It's not really zero sum, because the economy, population and exploitation of resources is constantly growing a little, but it's close enough that for simplicity we can pretend that it is.
For businesses in competition with each other, if one can lower costs while others cannot, it can lower prices and gain an advantage. If one town lowers taxes, businesses in that town will have an advantage, and businesses with the flexibility to move have an incentive to move there. The same thing happens at the state level, although it's generally harder to get employees and existing customers to move. It's really hard to get them to move from country to country, although with globalization, less and less every day.
These barriers to movement are very important economically. Within the barrier, people and money are free to move around, but across it, they are not. Macroeconomics is the study of complete economies, within these barriers. It turns out that there are some significant differences between these and businesses competing against one another. One of the most important is taxation. If everybody's taxes are changed equally, nobody gains an advantage. To the extent that the barriers exist and the taxation is equal, this means that taxes don't matter to the economy. They are simply pulled from the economy and the value of each remaining dollar is deflated to match. It's not really as simple as that, because the government is part of the economy and every bit of government spending goes right back in.
Because the government is large, how the government chooses to spend can significantly impact the economy. As conservatives like to put it, picking winners and losers. But government has some significant advantages over private enterprise. For example, it can do big things. Private business would never have built the transcontinental railroads, the interstate highway system, the hydroelectric system, and more. It can borrow money at rates impossibly lower than any business. It can regulate businesses, to make sure that they're not committing fraud, trade restraint, or any of a host of other unfair practices. It can create public safety institutions, from the police and fire departments to the military, and FEMA. It can do big research projects, from NASA to NIH, far beyond the reach of any private business.
Nearly all of these things are immensely stimulative of the overall economy. For example, building the roads employed millions of people, nearly all of whom worked for private companies at the time, and once they were built, they enabled hundreds of millions to move goods and people across great distances.
The free enterprise system is a good thing. But like all things, it's just as possible for there to be too much as too little.
22 September 2011
19 September 2011
Are Electric Cars Really Green?
I've been seeing several commentators point out that to deliver power for an electric car, it has to go through several conversion phases, each of which add substantially to the inefficiency of the process. This is absolutely true. For example: burning natural gas to produce electricity produces at best about 60% of the theoretical conversion efficiency. Realistically it's closer to 40%. Line drops add 5-20% further loss, and charging/discharging the battery adds another 5-20%. Burning coal or petroleum is even worse--30%. Meanwhile, a Prius is able to turn gasoline into motion at about 30%. So: picking relatively favorable numbers for natural gas, we get .4 * .9 * .85 = 30.6% conversion efficiency from the carbon in the natural gas to the motion. The commentators are right: there's no efficiency advantage in a pure electric.
But this omits the really big point, which is that it's possible to power a pure electric car from completely carbon free resources: Hydroelectric, Wind, Solar, Geothermal, etc. This is not true for a Hybrid, like the Prius.
Another complaint: There are a lot more batteries and they're harder to recycle. This is true too. Lithium and NiMH batteries are harder to recycle than lead acid batteries. (Lead car batteries are over 99% recycled). But several companies (including Toyota) are doing it fairly successfully. There's another win too: even if a lithium battery does get into the landfill, it's far less toxic than a lead battery, and nowhere near as bad as the Cadmium from a NiCd, which can poison a compost heap at extremely low concentrations.
Another: the glass, brass and tungsten from incandescent light bulbs is worth recycling, but the largest component, the glass, is close to chemically inert. CFCs (and other fluorescent bulbs) have about the same amount of glass, but they have a bunch of other stuff, all of which is easily recycled. The most important, by far, is the small amount of Mercury, which is nearly as harmful as Cadmium. (The amount of Mercury in a Fluorescent bulb is tiny though, compared to the amount in a NiCd battery). Home Depot and many others will recycle these. I keep a box for this purpose in my garage.
But this omits the really big point, which is that it's possible to power a pure electric car from completely carbon free resources: Hydroelectric, Wind, Solar, Geothermal, etc. This is not true for a Hybrid, like the Prius.
Another complaint: There are a lot more batteries and they're harder to recycle. This is true too. Lithium and NiMH batteries are harder to recycle than lead acid batteries. (Lead car batteries are over 99% recycled). But several companies (including Toyota) are doing it fairly successfully. There's another win too: even if a lithium battery does get into the landfill, it's far less toxic than a lead battery, and nowhere near as bad as the Cadmium from a NiCd, which can poison a compost heap at extremely low concentrations.
Another: the glass, brass and tungsten from incandescent light bulbs is worth recycling, but the largest component, the glass, is close to chemically inert. CFCs (and other fluorescent bulbs) have about the same amount of glass, but they have a bunch of other stuff, all of which is easily recycled. The most important, by far, is the small amount of Mercury, which is nearly as harmful as Cadmium. (The amount of Mercury in a Fluorescent bulb is tiny though, compared to the amount in a NiCd battery). Home Depot and many others will recycle these. I keep a box for this purpose in my garage.
Inherited Wealth and Conservatism
It seems to me that there's a correlation between conservatism and inherited wealth. A few examples: Bill Gates, Warren Buffett, George Soros, etc., made their money on their own, and are all fairly progressive. The Koch brothers, Richard Scaife, Steve Forbes, etc., inherited their money, and are very conservative. Here's what I think is going on:
Rich people who made it on their own understand the factors that gave them the opportunity. Buffett and Soros in particular started from very little and became wealthy on their own merits. (Gates had money to start with, but he expanded it by three or four orders of magnitude). They understand something about risk, spending money to make money, educating yourself and your collaborators, rewarding your collaborators, interdependency, and so forth. The conservatives know about some of this stuff, but they're afraid of it all. They're trying to minimize risk, both from external competition like other companies, and internal competition, from workers and unions.
Conservatives seem to see the world as a zero sum game: in order for them to stay on top, others need to be kept down. Progressives are aware of this effect, but they know that the world is not really a limited place. Rich progressives know that if you give someone else an opportunity, you may make him rich, but you almost always make yourself richer in the process.
Conservatives have always fought the unions with all their might, and for the past 35 years they've been winning. What they never seem to understand is that the time that the unions had the most power was the time that the economy was strongest. The middle class has always been the key to America's economic might. We won World War II and came out in the end stronger, not because Howard Hughes and Henry Kaiser made a lot of money (although they did) but because tens of millions of workers made lots of airplanes and ships, all of which production lines were almost immediately converted to making consumer products at wars end, and the millions of workers had money to pay for them.
Henry Ford was an interesting case, and works as a paradigm of the point I'm trying to make. When asked why he paid his workers so much, he explained that he wanted them to be able to buy his products. Talk about taking the long view! He was also an ardent pacifist, regarding war as a terrible waste. He was strongly opposed to racism. He was also opposed to labor unions (regarding them as corrupt), and he seems to have held some anti-semitic views for a time--he later recanted these views very publicly. By then very rich and suffering from many health issues, he didn't like FDR's New Deal, but when it looked like we were about to go to war against the Nazis, he embraced the cause completely.
Rich people who made it on their own understand the factors that gave them the opportunity. Buffett and Soros in particular started from very little and became wealthy on their own merits. (Gates had money to start with, but he expanded it by three or four orders of magnitude). They understand something about risk, spending money to make money, educating yourself and your collaborators, rewarding your collaborators, interdependency, and so forth. The conservatives know about some of this stuff, but they're afraid of it all. They're trying to minimize risk, both from external competition like other companies, and internal competition, from workers and unions.
Conservatives seem to see the world as a zero sum game: in order for them to stay on top, others need to be kept down. Progressives are aware of this effect, but they know that the world is not really a limited place. Rich progressives know that if you give someone else an opportunity, you may make him rich, but you almost always make yourself richer in the process.
Conservatives have always fought the unions with all their might, and for the past 35 years they've been winning. What they never seem to understand is that the time that the unions had the most power was the time that the economy was strongest. The middle class has always been the key to America's economic might. We won World War II and came out in the end stronger, not because Howard Hughes and Henry Kaiser made a lot of money (although they did) but because tens of millions of workers made lots of airplanes and ships, all of which production lines were almost immediately converted to making consumer products at wars end, and the millions of workers had money to pay for them.
Henry Ford was an interesting case, and works as a paradigm of the point I'm trying to make. When asked why he paid his workers so much, he explained that he wanted them to be able to buy his products. Talk about taking the long view! He was also an ardent pacifist, regarding war as a terrible waste. He was strongly opposed to racism. He was also opposed to labor unions (regarding them as corrupt), and he seems to have held some anti-semitic views for a time--he later recanted these views very publicly. By then very rich and suffering from many health issues, he didn't like FDR's New Deal, but when it looked like we were about to go to war against the Nazis, he embraced the cause completely.
10 September 2011
Incandescent bulbs and heating
One of the popular complaints about the push to ban incandescent light bulbs is that a lot of people have been relying on them for heating. Pretending that all the heat emitted is captured for heating (probably not a good assumption--entropy can never be zero), let's do an analysis. (Wikipedia does a simpler version of this)
Here are the cases:
* If you're cooling the building, the more heat the bulb emits, the worse. Period. Better to keep the heat out of the building. Switch to lower heat bulbs, like LED or CFC.
* If you're heating the building with energy that costs the same as electricity, i.e. a resistance heater (e.g. electric baseboard or space heater), the thermal efficiency of incandescent lightbulbs and the resistance heater are very similar and the energy use/cost are thus identical. Light bulbs, however, burn out fairly quickly while electric heaters last a long time.
(One factor that may be important: The room may not have a separate heater, and the light bulbs were emitting enough heat to keep it comfortable. Switching to low-heat bulbs may undermine this, and replacing them with an appropriate heater may be more trouble than the energy saving)
* If you're heating the building with something that costs more than electricity (e.g. gasoline), the light bulb is cheaper. You should probably think about getting a resistance heater. (this may not be practical in all cases, e.g. on a boat at sea)
* If you're heating the building with something that costs less than electricity (basically everything except gasoline...or burning money...), then you can lower your heating bill (and environmental impact) by switching to lower heat bulbs. Here's a nice calculator that enumerates quite a few of the cases. In case it goes away, here are the numbers at at the time of this writing:
The prices of these commodities varies a lot. 12 cents is the national average for electricity. Puget Power charges 9 cents here in suburban Seattle. Seattle City Light charges 4.59 cents. (30 years ago, PP charged 3/4 cent, about what SCL charged then. Thanks, WPPS.)
Heater efficiency is complicated. These days, natural gas furnaces over 90% are common. Electric heaters and light bulbs are a little higher, but not much. Since these are the major cases we're comparing with light bulbs, we can ignore the inefficiency differences for the most part although the calculator (and the numbers above) factor these numbers in.
Heat pumps are an interesting special case. Because their calculated efficiency is usually higher than 100% (COP>1...it's sounds like a second law of thermodynamics violation but it's not: they're stealing the heat from elsewhere) it's a significantly better use of electricity than a light bulb or resistance heater.
Bottom line: there's really only one case where it makes sense to stick with incandescent bulbs: where other types of heater are impractical for some reason, and incandescent bulbs provide sufficient heat to keep the room comfortable. In all other cases, lower heat bulbs use less energy
(There may be other reasons to stick with incandescents--for example, the aesthetics may be preferred, but that's not my topic for today)
Here are the cases:
* If you're cooling the building, the more heat the bulb emits, the worse. Period. Better to keep the heat out of the building. Switch to lower heat bulbs, like LED or CFC.
* If you're heating the building with energy that costs the same as electricity, i.e. a resistance heater (e.g. electric baseboard or space heater), the thermal efficiency of incandescent lightbulbs and the resistance heater are very similar and the energy use/cost are thus identical. Light bulbs, however, burn out fairly quickly while electric heaters last a long time.
(One factor that may be important: The room may not have a separate heater, and the light bulbs were emitting enough heat to keep it comfortable. Switching to low-heat bulbs may undermine this, and replacing them with an appropriate heater may be more trouble than the energy saving)
* If you're heating the building with something that costs more than electricity (e.g. gasoline), the light bulb is cheaper. You should probably think about getting a resistance heater. (this may not be practical in all cases, e.g. on a boat at sea)
* If you're heating the building with something that costs less than electricity (basically everything except gasoline...or burning money...), then you can lower your heating bill (and environmental impact) by switching to lower heat bulbs. Here's a nice calculator that enumerates quite a few of the cases. In case it goes away, here are the numbers at at the time of this writing:
| Energy Source | Cost/MBTU |
|---|---|
| Electricity@ $0.09/kwhr | $26.37 |
| Electricity@$0.12/kwhr | $35.16 |
| Electricity@$0.046/kwhr | $13.48 |
| Natural Gas | $17.38 |
| #2 Fuel Oil | $33.25 |
| Gasoline@$3.75 | $41.25 |
| Hardwood | $16.66 |
The prices of these commodities varies a lot. 12 cents is the national average for electricity. Puget Power charges 9 cents here in suburban Seattle. Seattle City Light charges 4.59 cents. (30 years ago, PP charged 3/4 cent, about what SCL charged then. Thanks, WPPS.)
Heater efficiency is complicated. These days, natural gas furnaces over 90% are common. Electric heaters and light bulbs are a little higher, but not much. Since these are the major cases we're comparing with light bulbs, we can ignore the inefficiency differences for the most part although the calculator (and the numbers above) factor these numbers in.
Heat pumps are an interesting special case. Because their calculated efficiency is usually higher than 100% (COP>1...it's sounds like a second law of thermodynamics violation but it's not: they're stealing the heat from elsewhere) it's a significantly better use of electricity than a light bulb or resistance heater.
Bottom line: there's really only one case where it makes sense to stick with incandescent bulbs: where other types of heater are impractical for some reason, and incandescent bulbs provide sufficient heat to keep the room comfortable. In all other cases, lower heat bulbs use less energy
(There may be other reasons to stick with incandescents--for example, the aesthetics may be preferred, but that's not my topic for today)
09 September 2011
Anecdotes and Generational Memory
One of the big differences between humans and other animals is that we can remember what other people tell us. Books and their electronic counterparts allow this memory to extend not just across personal contacts, but across history itself. But we get a lot of understanding from the stories told by our more immediate correspondents.
I just read Paul Krugman's speech on the state of economics and was reminded of this. Many people, including conservative economists, have a built-in bias towards certain ideas, but in the 1930s, the field of economics successfully repudiated them. The success of this venture was such that there were no major banking crises for 60 years. During that time, the conservatives found a narrative and strategy that fit their model, and starting in the late 70s, this began to get traction, to the point that by 1990, it was acceptable to snigger in professional conferences at the policies that had solved the depression and prevented financial panics for so long. What was it that had changed? The people who actually remembered the Great Depression as adults and professional economists had started to die off in large numbers.
As humans, we learn best by hearing anecdotes, told to us by trusted authorities. These could be grandparents, valued teachers or professors, etc. We can learn from dry, abstract writing, but it doesn't sink in as well if it doesn't connect to us in some personal way. Anecdotal learning, even if wrong, affects us more deeply. After about 1990, the economists who both remembered and understood the Great Depression were gone, and the new stories were about "The Great Moderation" and the failure of the Phillips Curve. The stories were wrong, but they stuck.
There's a similar lesson to be learned from "The former Yugoslavia". That region is made up of several ethnic groups and two major religions. For hundreds of years, there had been almost constant small scale fighting, but Marshal Tito managed to unite the factions--with support of the Allies during WWII and the Soviet Union afterwards. He was an authoritarian strongman and managed to suppress the strife that was boiling under the surface. When he died in 1980, it was still simmering, but most people had learned to ignore it--and many former blood rivals were friends, neighbors and had even intermarried. The peace lasted for almost a decade. But there were too many stories, told by grandparents to gullible youngsters, about how that person's grandfather killed your great uncle. Bad actors were able to exploit these hatreds, along with the economic pressures caused by a collapsing Soviet sphere of influence, to create a bad situation and attempted genocide. Had the Tito regime lasted for another 20 years, the hatreds would have all been forgotten and Milosovic would have garnered no support. The peace that's ensued from the NATO intervention seems to be lasting...we can hope that we'll get no more bad stories.
Thomas Kuhn pointed out that the way change happens is when somebody comes up with a good idea, it's often repudiated for quite a while. What eventually happens is that the old conservatives who were suppressing the good idea die off, and their anecdotes and influence dies with them, and the new idea suddenly gets traction, seemingly out of nowhere.
In the case of Economics, there's something a lot more sinister at work. The bad old ideas are being propped up not just by old conservatives, but new conservatives who have been getting tremendous funding to reject the new ideas. The conservatives know this works, so they're arguing that "socialists" have been funding academia to promote Keynesian ideas. Soros and Buffet (and Obama) are very, very far from socialists, and their contributions pale compared to how Koch and Scaife and others are funding Cato, AEI, the University of Chicago and more. Same story in Climate Science: the most prominent deniers are funded by these same sources. But they've been trying to sell the story (the Wall Street Journal seems to be their favorite publication) that the folks warning about Climate Change are only doing it because they think they'll get their latest research project funded. The dry data all support Keynes and Hansen. But it's easy to create anecdotes that tell a different story.
I just read Paul Krugman's speech on the state of economics and was reminded of this. Many people, including conservative economists, have a built-in bias towards certain ideas, but in the 1930s, the field of economics successfully repudiated them. The success of this venture was such that there were no major banking crises for 60 years. During that time, the conservatives found a narrative and strategy that fit their model, and starting in the late 70s, this began to get traction, to the point that by 1990, it was acceptable to snigger in professional conferences at the policies that had solved the depression and prevented financial panics for so long. What was it that had changed? The people who actually remembered the Great Depression as adults and professional economists had started to die off in large numbers.
As humans, we learn best by hearing anecdotes, told to us by trusted authorities. These could be grandparents, valued teachers or professors, etc. We can learn from dry, abstract writing, but it doesn't sink in as well if it doesn't connect to us in some personal way. Anecdotal learning, even if wrong, affects us more deeply. After about 1990, the economists who both remembered and understood the Great Depression were gone, and the new stories were about "The Great Moderation" and the failure of the Phillips Curve. The stories were wrong, but they stuck.
There's a similar lesson to be learned from "The former Yugoslavia". That region is made up of several ethnic groups and two major religions. For hundreds of years, there had been almost constant small scale fighting, but Marshal Tito managed to unite the factions--with support of the Allies during WWII and the Soviet Union afterwards. He was an authoritarian strongman and managed to suppress the strife that was boiling under the surface. When he died in 1980, it was still simmering, but most people had learned to ignore it--and many former blood rivals were friends, neighbors and had even intermarried. The peace lasted for almost a decade. But there were too many stories, told by grandparents to gullible youngsters, about how that person's grandfather killed your great uncle. Bad actors were able to exploit these hatreds, along with the economic pressures caused by a collapsing Soviet sphere of influence, to create a bad situation and attempted genocide. Had the Tito regime lasted for another 20 years, the hatreds would have all been forgotten and Milosovic would have garnered no support. The peace that's ensued from the NATO intervention seems to be lasting...we can hope that we'll get no more bad stories.
Thomas Kuhn pointed out that the way change happens is when somebody comes up with a good idea, it's often repudiated for quite a while. What eventually happens is that the old conservatives who were suppressing the good idea die off, and their anecdotes and influence dies with them, and the new idea suddenly gets traction, seemingly out of nowhere.
In the case of Economics, there's something a lot more sinister at work. The bad old ideas are being propped up not just by old conservatives, but new conservatives who have been getting tremendous funding to reject the new ideas. The conservatives know this works, so they're arguing that "socialists" have been funding academia to promote Keynesian ideas. Soros and Buffet (and Obama) are very, very far from socialists, and their contributions pale compared to how Koch and Scaife and others are funding Cato, AEI, the University of Chicago and more. Same story in Climate Science: the most prominent deniers are funded by these same sources. But they've been trying to sell the story (the Wall Street Journal seems to be their favorite publication) that the folks warning about Climate Change are only doing it because they think they'll get their latest research project funded. The dry data all support Keynes and Hansen. But it's easy to create anecdotes that tell a different story.
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