Category: Economics

Back to the Future? Not with my vote!

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I spend a fair piece of time criticizing President Obama for what he does – instead of doing what he could do. And, frankly, he doesn’t deserve all the credit he gets. Folks like Peter Orszag, Ian Bremmer, even Ben Bernanke and more contributed to fighting our way out of the economic struggle that left us with less than we all had – and might have had.

But, the comparison that creeps in the Republican Party make, the comparison that cretins in the Tea Party make – are not laughable, they are criminally backwards.

Thanks, SmartAlix

China adopts emissions policy that won’t get through U.S. Congress

George HW Bush signing Clean Air Act legislation including cap-and-trade in 1990

Last Thursday night news broke of the impending announcement of a national cap-and-trade program for carbon in China, as part of a U.S.-China joint climate announcement. This market-based approach, pioneered in the U.S. with the sulfur dioxide trading program, has clearly come to be seen as an essential policy tool to combat climate change, increasingly embraced by countries, policymakers, and global business leaders of all political persuasions.

The 1990 Clean Air Act Amendments that established the Acid Rain program to limit emissions of sulfur dioxide (SO2) and nitrogen oxides was a milestone for market-based environmental policies. It led to the creation of the SO2 trading program, which has helped cut those emissions at a lower cost than many had envisioned at the start of the program. The experience with this program also provides critical lessons on the importance of good policy design that can help inform future policies. (For example, the need for updating emissions caps to reflect the latest science and declining technology costs.)

Since then, cap-and-trade systems have been successfully established in Europe (the EU ETS), California (via AB32), and the nine Northeast RGGI states, among other places. Many other places, including the Canadian province of British Columbia, have a carbon tax or plan to implement one…

Starting in 2013, China began to pilot carbon cap-and-trade programs at the sub-national level. The pilot programs now extend to six cities (Beijing, Chongqing, Hangzhou, Shanghai, Shenzhen, and Tianjin) and two provinces (Guangdong and Hubei). The experiment has had some encouraging results, and (together with lessons from the EU ETS, California, RGGI, and other carbon trading regimes) provide the real-world experience needed to design a national system to limit emissions in a cost-effective way. China’s INDC announced earlier this year signaled the country’s intention to use carbon pricing to help meet its goal of peaking CO2 emissions by 2030, if not earlier…

Last week was a momentous one for climate action, book-ended by the Pope’s address to Congress and the joint climate announcement from Presidents Obama and Xi. The economist in me cannot help but wonder: If China can do it, why not the U.S.? It’s time for a national price on carbon in the country that invented the concept.

You needn’t be a cynic to understand why the United States will not keep its fair share of the bargain struck between Presidents Obama and Xi. Congress must be part of the equation funding efforts of this size. Between Flat Earth Republicans and Blue Dog Democrats, nothing will be accomplished. That’s just a realistic view of what our national-level politicians have become.

China’s pilot programs have moved forward. Just as their experiments with individual cities becoming Free Trade Zones worked out, other cities are already in line waiting not-very-patiently to acquire the benefits of progressive reforms.

While this system can sort about half the polluting problems of excess carbon, the last-mile question also needs to be answered, as well. China needs to replace coal home fires for heating and cooking with natural gas. That process began a few years ago; but, in many ways, it is more demanding because it requires upgraded infrastructure — nationwide.

Nevertheless, both are on the way. Which is about two orders of magnitude more than we can say about the dungheap of backwardness that stretches from SCOTUS to Congress.

Good news in the UK — Renewable electricity overtakes coal

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Britain generated more of its electricity from renewable sources than from burning coal for the first time in the second quarter of 2015, as more wind and solar farms were built.

A record high of 25.3 per cent of the UK’s power came from wind, solar, biomass and hydro-electric sources in the three months to June, up from just 16.7 per cent in the same period the year before.

By contrast the share of electricity from Britain’s ageing fleet of coal-fired power stations fell to 20.5 per cent, down from 28.2 per cent a year previously…

The Department of Energy and Climate Change said the record share of renewable generation reflected not only more renewable capacity, such as the construction of big new offshore wind farms, but also “more favourable weather conditions for renewable generation”.

Biomass energy, which is also classed as renewable, also increased following the conversion of part of Drax, Britain’s biggest coal-fired power plant, to burn wood instead.

The drop in coal power also reflected the closure or temporary shutdown of other coal power stations and an increase in the UK’s carbon tax which made coal plants less profitable to run.

You don’t need an amplifier to hear the tears falling from the dark orbs that pass for eyes in the Koch Brothers. They cry for every penny of profit lost by their fossil fuel brotherhood of pollution.

Using solar energy in the dark is closer than you think

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In May, when Tesla Motors announced its new battery product to vast media buzz, the talk was all about people putting batteries in their solar-powered homes, and thereby becoming that much less reliant on the grid.

But there was always another and perhaps even bigger side of the story — the idea that very large scale batteries or battery packs could help out the grid itself by storing large amounts of solar energy for use in the evening or at night. The ultimate effect might be to displace electricity generated from coal or natural gas, and convert an inherently “intermittent” renewable energy source — solar — into a more constant one.

So is it happening? The answer seems to be yes — 2015 has seen several key announced, completed, or experimental grid-scale projects pairing batteries and solar photovoltaic panels….

Indeed, SolarCity — which is chaired by Tesla CEO Elon Musk — has just announced plans to bring precisely this combo to Hawaii, a state that continues to lead the way when it comes to the adoption of solar and batteries, thanks to its towering electricity costs, which are the highest in the nation.

SolarCity and the Kauaʻi Island Utility Cooperative jointly announced last week that they’ve entered into a solar power purchase agreement in which SolarCity will provide 20 years of power from a 52-megawatt-hour battery installation that will be able to send as many as 13 megawatts of electricity to the island’s grid. The battery will draw power from an accompanying solar array.

The biggest news is when the energy would be supplied: the evening. “What makes this exciting is basically that it’s dispatchable solar that will be available at night,” says Peter Rive, the chief technology officer of SolarCity. The system is slated to be running by the end of 2016, said Rive, and will likely use Tesla batteries for the energy storage component.

Once that happens, solar energy will be no longer confined to simply being used when the sun is shining, at least on Kaua’i. Rather, thanks to storage, its use will be shifted to other hours of the day — removing one reason that power plants have often been powered by various types of fossil fuels (on Kaua’i, diesel), which of course can burn at any hour…

There are other examples, similar approaches – not quite the same. To me that is extraneous. What counts is that folks are working at one more avenue to make solar power generation practical.

Walking one small step at a time towards freedom from fossil fuel.

Egg prices have doubled in the last year. Here’s why

Click to enlargeEgg farmer looking for a subsidy – See any chickens?

If you look at a graph of the price of eggs, it usually resembles the flight path of a chicken: It bounces up a little bit, then flutters back to earth. But in the last few months egg prices have been soaring like — well, if not like eagles, at least like a flock of enthusiastic pigeons. The price is twice what it was this time last year.

What’s going on here? This year, avian flu hit a lot of egg farmers, wiping out their hens. Now this loss of birds is translating to a scarcity of eggs. Interestingly, the price of specialty eggs — like organic, and vegetarian-fed — hasn’t increased in the same way, which means they are pretty competitive.

That doesn’t mean that organic chicken operations are immune to avian flu. Donald Carr looked into this and found that small egg operations are probably just as prone to disease as big ones.

Congress is currently considering a bailout to help chicken farmers, which might help bring down the cost of eggs. From the perspective of someone living in poverty, cheaper eggs are important: Eggs have long been a healthy and inexpensive mainstay. They are easy to cook, too.

Our family eats eggs from cage-free chickens. If you’ve ever seen photos or visited a so-called battery chicken farm you’d probably make the same decision. The eggs we also eat are brown not white. While color variations to some extent are genetic, the popularity of white eggs comes from the same Anglo-Saxon fixation on white means clean, white means pure. Now, centuries out-of-date.

Growing up in New England, folks generally have more sense than to believe that myth – which is why most folks eat eggs with brown shells from chickens that didn’t have extra minerals added to their diet to produce white shells. Not any different from ignoring bleached, all-purpose flour. Yankees buy King Arthur unbleached flour instead of the stuff that keeps the stock market happy.

The eggs my wife and I eat have increased in price 10% year-over-year.

2-way freight train service starts between Poland/China


A cargo train consisting of 41 carriages completed its first laden voyage from the city of Lodz in Poland to Chengdu, capital city of southwest China’s Sichuan Province on Sunday.

The train, carrying mostly food and beverages, including beer and cookies, took 16 days to travel the 9,826-kilometer Chengdu-Europe cargo line.

The Chengdu-Europe express railway service was started in April, 2013. So far, a total of 106 cargo trains have traveled to Lodz from Chengdu, exporting goods worth 693 million U.S. dollars, but all have returned to China empty, according to Wan Wenjun, deputy manager of the Chengdu-Europe express railway company.

A number of cities — including Chongqing in southwest China; Wuhan, Zhengzhou and Changsha in central China; Shenyang and Harbin in northeast China — have rail freight services to Europe.

And this is the start of the benefits from the projected Silk Road. As it was centuries ago, China’s new economy intends to be a 2-way street between China manufacturing and Western manufacturing. The redirected focus on consumer goods and services should be a growth market for Western firms bright enough to realize the opportunity.

Melancholia must be understood as distinct from depression

In Western nations – or nations whose ethos is philosophically Western – this is a relevant discussion. Economically, politically – on a global scale – we are diminished. Mostly by the incompetence of our own leaders. Yes, that is not limited to our political leaders.

First described by Hippocrates, “melancholia” or melancholic depression was considered a specific condition that commonly struck people out of the blue – and put them into the black. In modern times, it came to be described as “endogenous depression” (coming from within) in contrast to depression stemming in response to external stressors.

In 1980, the third edition of the Diagnostic and Statistical Manual (DSM-III), the official classificatory system of the American Psychiatric Association, re-modelled depressive disorders. The new classification operated largely on degrees of severity, comprising “major” depression and several minor depressions.

This is how depression came to be modelled as a single entity, varying only by severity (this is known as the dimensional model). And over the last decade, this model has been extended to include “sub-clinical depressions”, which is basically when someone is sad or down but not diagnosable by formal mental illness criteria.

The changes generated concern about the extension of “clinical depression” to include and “pathologise” sadness. While everyone feels down or sad sometimes, normally these moods pass, with little if any long-term consequences.

The boundary between this everyday kind of feeling down and clinical depression is imprecise. But the latter is associated with a greater severity of symptoms, such as losing sleep or thinking life isn’t worth living, lasts for longer and is much more likely to require treatment.

The dimensional model is intrinsically limited; “major depression” is no more informative a diagnosis than “major breathlessness”. It ignores the differing – biological, psychological and social – causes that may bring about a particular depressive condition and which inform the most appropriate therapeutic approach (be it an antidepressant drug, psychotherapy or social intervention)…

My research team is trying to establish melancholia’s categorical status and detection, and so improve its management. Here’s what we know – or think we know – about the distinctness of melancholia.

First, it shows a relatively clear pattern of symptoms and signs. The individual experiences profound bleakness and has no desire to socialise, for instance, finding it hard to obtain any pleasure in life or to be cheered up…

Episodes commonly emerge “out of the blue”. Even if it follows a stressor, it’s disproportionately more severe than might be expected and lasts longer than the stressor…

Melancholia has a strong genetic contribution, with sufferers likely to report a family history of “depression”, bipolar disorder or suicide. It’s largely biologically underpinned rather than caused by social factors (stressors) or psychological factors, such as personality style.

The illness is also unlikely to respond to placebo, whereas major depression has a placebo response rate in excess of 40%. But melancholia shows greater response to physical treatments, such as antidepressant drugs (especially those that work on a broader number of neurotransmitters), and to ECT (electroconvulsive therapy). ECT is rarely required, however, if appropriate medications are prescribed.


Melancholia shows a lower response to psychotherapy, counselling and psychosocial interventions – these treatments are more salient and effective for non-melancholic depression.

Melancholia shows similar “treatment specificity”, with medication being the treatment of choice.

When is it anything else?

Clearly, melancholia needs to be recognised as a distinct psychiatric condition – not simply as a more severe expression of depression. This recognition could lead to improved clinical and community awareness, which is important because managing melancholia requires a specific treatment approach.

Though no mention is made of societal context, economics, socio-political realities, I presume to hope that treatment providers have the sophistication to peer around more broadly than suggested here. The feeling that Life Sucks sometimes is a direct reflection of the fact that Life Sucks. Not only for an individual; but, a whole class of people. That class defined in economic, ethnic, caste or gender terms.

When you live in a nation where the predominant political rulers, liberal or conservative, seem bent upon ruling the world through military and economic might – and their diminishing returns seem more and more likely to end in destruction of our species and a good deal of the world as well – melancholia rooted in political ineffectuality seems a logical choice.


Canadians can’t stop laughing over Scott Walker’s border wall proposal

Click to enlargeObviously, we need a wall here…

Former Toronto mayor Rob Ford says Canada has no plans to invade the United States – and that Americans can rest assured the threat from the north is receding.

There is no need, the ailing mayor and most cackling Canadians seem to agree, for the 5,000-mile wall along the Canadian border that presidential candidate Scott Walker suggested this week is “a legitimate issue” on the campaign trail to the White House…

“I don’t have a problem with the States,” the outspoken former mayor declared in a brief interview with the Guardian on Monday evening, as he limped toward Toronto’s Rogers Centre to watch the city’s surging Blue Jays baseball team play the Cleveland Indians, a rival visiting from the far side of unfortified Lake Erie.

Most Canadians, the former magistrate known for smoking crack added, are similarly well-disposed toward their southern neighbours – and understand full well that such an endeavour would be nearly impossible anyway…

“It’s ludicrous and hilarious,” a Blue Jays fan named Neil from Toronto said of Walker’s fleeting flirtation with a norther border wall. “But that’s the Republicans.”

Bonnie, from nearby Milton, could not stop laughing at the mention of Walker’s name. “He’s a nutcase,” she exclaimed. “They can’t afford healthcare, but they can afford walls.”…

Defending the US-Canadian border would – hypothetically, of course – require a wall 8,891 kilometres long, with 2,475 kilometres devoted to protecting Alaskan wilderness and even more wall running down the middle of the Great Lakes.

Citing preliminary estimates made by the US Department of Homeland Security for the cost of a southern wall with Mexico, the Toronto Star estimated the cost of a Walker-style wall at “north of $18 billion (US)”…

Cheerfully channeling Sarah Palin, Mike Bradley boasted that he can see America from his window in the Canadian border town of Sarnia, where he is mayor. But to him and others who have watched the increasing militarisation of the formerly undefended border over the past decade, Walker’s comments were no joke.

“This is just ongoing,” Bradley said, citing examples of unexpected hostility on the northern border since 9/11 including plans to launch observation balloons, proposals to charge fees for crossing the border, and live-fire exercises by US coast guard patrol vessels armed with machine guns.

The difference between ignorant and stupid requires that “stupid” work at defending their beliefs. So, what Canadians call the world’s longest undefended border is just one more opportunity for nutball militarists to resolve a paranoid delusion with guns.

China passes new pollution law

Legislators have approved amendments to China’s 15-year-old air pollution law that grant the state new powers to punish offenders and create a legal framework to cap coal consumption, the Asian giant’s biggest source of smog.

The draft amendments were passed by 154 votes to 4, with five abstentions, Zhong Xuequan, spokesman for the National People’s Congress, China’s parliament, told a media briefing…

The ruling Communist Party has acknowledged the damage that decades of untrammeled economic growth have done to China’s skies, rivers and soil. It is now trying to equip its environmental inspection offices with greater powers and more resources to tackle persistent polluters and the local governments that protect them.

The amendments are expected to make local governments directly responsible for meeting environmental targets. They also ban firms from temporarily switching off polluting equipment during inspections and outlaw other behavior designed to distort emission readings.

Tong Weidong, vice-director of the NPC’s legal work committee, told the briefing the law would improve the way local authorities were assessed and allow them to draw up their own plans to meet environmental targets…

However, researchers said the changes do not go far enough and that the third reading of the bill should have been postponed until all its shortcomings had been resolved.

Sounds like another step forward. The article isn’t clear about household air pollution though broadly it sounds as if it is covered.

Like England in the period after WW2, half of China’s coal-generated air pollution comes from home fires for cooking and heating. These are almost always in the least efficient stoves for any purpose – regardless, there isn’t any way to bring them up to useful standard.

I’ve blogged earlier about efforts to bring NatGas into easy urban access and the last-mile problem will remain the greatest obstacle. That solution is what changed life in many American industrial cities as well as the UK in the fifteen years or so after the war. That change didn’t have to provide new pipelines or local access. We already had use of coal gas. The conversion only required a new orifice for each burner in every stove or furnace.

China’s cities will have to excavate.