36 thoughts on “Monday Message Board

  1. I am seeking feedback on an efficiency improvement to the way we make and repay loans. It is a four-minute read. It has the potential to make owning a home possible for all and to increase the returns on savings. I would like to see if it makes sense and if not why not. Comments on the article or here would be good.

    View at Medium.com

  2. In a recent transcript of an interview with dissident economist Michael Hudson http://www.counterpunch.org/2017/03/15/how-bankers-became-the-top-exploiters-of-the-economy/ there was a glancing reference to one Frederick Soddy. Soddy was a British chemist from the golden era of quantum mechanics and relativity who received a (real) Nobel for his work on radioactivity https://en.wikipedia.org/wiki/Frederick_Soddy . He was also notable as an earlier promoter of social responsibility by scientists. But this reference was to his economic thoughts. A search for illumination revealed a fascinating story which the ecologically inclined readers of this blog might find interesting.

    Google was completely useless at first for identifying what this reference pertained to. But fortunately a better informed friend pointed me to an introductory New York times article http://www.nytimes.com/2009/04/12/opinion/12zencey.html and the reproduction of a much more detailed 1980 article by the ecological economist Herman Daly. https://billtotten.wordpress.com/2009/07/12/the-economic-thought-of-frederick-soddy/

    Apparently after his Nobel years Soddy explored and wrote several books on the subject of economics in the 1920s coming from and maintaining his point of view as a physicist/chemist but at the time was dismissed and dumped on by mainstream economists in much the same way as the Limits to Growth authors, Odum, the Ehrlichs etc – i.e. science based people trying to make sense of economics – were in another era and for exactly the same sorts of reasons.

    And yet as the NYT article points out 4 of his 5 preposterous suggestions for fixing economics (what would a scientist know) have subsequently been taken up while the last one, 100% reserve banking, is an area of active debate. It appears also that while Soddy’s economic analysis has been forgotten by in large his ideas seem to keep coming back e.g. by Georgescu-Roegen when Daly wrote his piece suggesting he may well have been a genius before his time. Daly noted his ideas were far from perfect but then so were Copernicus’s. At the least the above links I suggest are food for thought on how economics and the real world interact and might be aligned in some better future.

  3. @Kevin Cox
    With respect. After looking at this issue “High Returns, Low Risk Investing” with managing my superannuation in mind I have to say this sounds like an oxymoron in this day and age especially when we are discovering the illusion that was the era of low risk high return (1990-2008). Beyond that you dont specify what ‘High’ means.

    But I do agree with you in one respect. Money is an extremely rubbery and dangerous beast at least from my materialist perspective – and not the solid lump of gold or silver we too easily and often conceive it to be mainly through laziness.

  4. Soddy distilled his eccentric vision into five policy prescriptions, each of which was taken at the time as evidence that his theories were unworkable: The first four were to abandon the gold standard, let international exchange rates float, use federal surpluses and deficits as macroeconomic policy tools that could counter cyclical trends, and establish bureaus of economic statistics (including a consumer price index) in order to facilitate this effort. All of these are now conventional practice.

    Good stuff, but Keynes was advocating the first three at the same time, and the National Bureau of Economic Research was established in 1920. Keynes and NBER were taken seriously, while Soddy was not.

  5. @John Quiggin

    Keynes and NBER were taken seriously, while Soddy was not.

    Hmm. Must have been one of the few times when a physicist wasn’t just afflicted with ‘physics syndrome’ – ie that physicists know everything about everything, and nobody else knows anything about anything.

    But then, who should have been taking Soddy seriously ? Did he have powerful allies in the economics profession to push his truths in the corridors of economic power ? Getting the attention of just the “right people” has always been a problem.

    Just for comparison, I’d like to point to a recent Tim Harford post: “The problem with facts”. Here’s a pertinent extract:

    Prusiner is a neurologist. In 1972, he was a young researcher who’d just encountered a patient suffering from Creutzfeldt-Jakob disease. It was a dreadful degenerative condition then thought to be caused by a slow-acting virus. After many years of study, Prusiner concluded that the disease was caused instead, unprecedentedly, by a kind of rogue protein. The idea seemed absurd to most experts at the time, and Prusiner’s career began to founder. Promotions and research grants dried up. But Prusiner received a source of private-sector funding that enabled him to continue his work. He was eventually vindicated in the most spectacular way possible: with a Nobel Prize in Medicine in 1997. In his autobiographical essay on the Nobel Prize website, Prusiner thanked his private-sector benefactors for their “crucial” support: RJ Reynolds, maker of Camel cigarettes.

    Couldn’t even get the attention of his own profession.

  6. Soddy’s fifth proposal, 100 per cent reserve banking isn’t original either, though (IMHO) it is cranky.

    More generally, econophysics has been a bit of a disappointment. Partly economists policing the boundaries as you suggest. But mostly, it’s pretty shoddy stuff, of a standard that wouldn’t pass muster in physics proper.

  7. Managing peak load

    What would the value have been if, at 5 pm on Wed 8 Feb, most of the air conditioners or water heaters in Adelaide could have been turned OFF, but leaving everything else ON ?

    There could well have been no need for whole suburbs to have been blacked out.

    Consumers might not have been quite as comfortable, or reduced to warm showers, but they would still have had lights and freezers.

    And Adelaide would still have had street lights, and traffic lights, and hospitals would have had power.

    Domestic demand-side management is not difficult.

    Most new air conditioners in Australia are compliant with AS4755, and can be remotely instructed to reduce power consumption.

    There have been various trials of AS4755 over the last few years, and it seems very few consumers even noticed.

    Hot water tanks and pool pumps can be controlled remotely by replacing their circuit breaker with a ‘smart breaker’, at a cost of $20-50.

    And now that NBN is rolling out they can all be WiFi’d to the internet.

    Energy Aggregators

    The householder would be able to programme and control these appliances, but more practical would be to encourage ‘Energy Aggregators’

    The Aggregator would be able to negotiate reduced power contracts (on behalf of their clients), by guaranteeing to the electricity companies that they would cap consumption, if requested, at times of peak load.

    In turn their clients (the householders) would get a reduced tariff in return for allowing the Aggregator to reduce their air-conditioning or turn off hot water or pool pumps, during peak demand.

    In the crazy world of the Australian Electricity Market, one can imagine Aggregators coming to the market at peak periods to bid for power reduction on behalf of their clients ! (would this be a Dutch auction ?) The electricity companies would be paying consumers to reduce their consumption.

    Aggregator ‘plans’ could be like superannuation investment strategies – the lower the cost the higher the risk of being dumped.

    Why hasn’t domestic demand-side management been implemented ?

    It could be that it is not in the interests of our privatised supply companies.

    The ‘gold-plating’ of the network was because it made more profit for these companies.

    Recording domestic energy usage

    Another benefit of DSM would be the ability to record consumption, appliance-by-appliance, at no extra cost.

    If a household is considering installing solar panels or solar hot water it is difficult to make a rational decision if you don’t know how much they are costing.

    Would the household be better off just installing solar hot water; or should they install solar pv; or do nothing ?

    DSM could answer these questions.

    The bill from an Aggregator could itemise by hot water, air-conditioning, pool, power, lights

  8. It’s one of the striking features of the failure of retail competition that nothing like this has happened.

  9. @John Quiggin

    The thing that annoys me is that even choosing “peak pricing” plans from electricity retailers doesn’t get me access to the real peaks. I miss the good old days in NZ when large users like the university were rewarded quite handsomely for load shedding during a few peak load times. IIRC the supplier could nominate up to 10, one hour periods every year on a couple of hours notice.

    These days with smart meters and so on you would expect that they could just have that as part of the standard supply system. Ten times a year everyone gets to pay $10/kWh for electricity during the nominated hour. I predict a fall in demand during those times 🙂

  10. @Moz of Yarramulla
    Smart meters aren’t very smart – all they can do is totally disconnect the consumer

    I think something like an ‘Energy Aggregator’ would be useful

    If the National Electricity Market has a supplier willing to pay $10 kwhr to cover a peak demand, why couldn’t an Aggregator enter the market and get the $10 to *reduce* the peak demand ?

    And the Aggregator response could well be much quicker than the 2-3 hours to fire up a gas generator.

  11. Trevor Finch : Smart meters aren’t very smart – all they can do is totally disconnect the consumer

    That’s not a physical requirement, it’s an economic or political one. The smart meter we have records a whole bunch of stuff but the supplier declines to tell us exactly what or allow us to access the data. I have been tempted to challenge my bill in court just to force disclosure, but I’d want help with that. But we do have off-peak water heating, so it’s possible to have controlled loads and a smart meter. Having more than one controlled load seems possible to me.

    I am more likely to go the opposite direction and disconnect. Or more accurately, build a granny flat that relies on the main house to recharge its batteries via the grid when that is necessary. It seems likely that I can quite legally wire it up to do that and also to export any surplus at relatively low cost. But I am moving slowly on that because I am also trying to pay off the mortgage on a Sydney house.

  12. @Moz of Yarramulla

    Perhaps should have been: The ‘Smart Meters’ being installed in Australia do not seem to be very smart or transparent.

    But domestic demand-side management would allow smart control and recording.

    The Energy Market website is great stuff – is this economist porn ?

  13. @John Quiggin

    This does happen with industry. Large users do have interruptible contracts. Of course these are relatively few in number and they use a lot of electricity. Organising a large number of low use households is more difficult. And of course to get people to agree the discount on the electricity price would have to be substantial – no way am I going to agree to having my air conditioner cut off on a 40 degree day for $50 a year off my electricity bill. ($500 off? Where do I sign?) And given that at least half my bill is network charges which the regulatory regime more or less fixes in stone, it’s hard to see how the savings could be substantial.

    But the biggest obstacle is this: in a first world country, people expect the lights to go in when they flick the switch. It shouldn’t be that hard to do. Rationing schemes that switch off your air conditioner on the hottest days, that is, when you need it most, should not be needed.

  14. On physicists in economics, what John said – they have a long history of thinking they have thought of things that no-one else could possibly have thought of, and not just in economics. Occasionally they have – but not often, and not in Soddy’s case. The cartoon at https://xkcd.com/793/ applies.

    That said, as John will know a great many of the commonplace mathematical tools used in economics were adapted from physics.

  15. Smith :at least half my bill is network charges … Rationing schemes that switch off your air conditioner on the hottest days, that is, when you need it most, should not be needed.

    Those two things are very strongly linked, but for political reasons we can’t fix that problem. The grid charges and a fair slice of the usage cost comes from people building or buying poorly insulated houses and compensating for that with enormous air conditioners. But sadly when someone says “they should pay for that” the hue and cry is enormous, almost as large as the bill we all get to share so that they can do it.

    It’s understandable. If someone said to me “in order to support your new $3000 aircon you need to pay $30,000 for an upgraded grid connection” I’d be unhappy. It would even worse if they said “because someone down the street installed a new aircon you have to pay an extra $30,000 to keep the lights on”. Instead everyone pays an extra $300 a year, and it looks as though that’s going to get worse not better.

    Sadly the option “vote the property developers out of the lawmaking process” isn’t even on the table, so there’s no chance you’ll see sensible building codes in the foreseeable future. And we all know what happened when Kevin07 tried to put better insulation into existing houses. Now *there’s* a political lesson that anyone can understand.

  16. “smart meter we have records a whole bunch of stuff but the supplier declines to tell us exactly what or allow us to access the data.”

    That is not just wrong on the part of your supplier, it is plain stupid. How on earth do they expect to overcome resistance to smart meters if people can’t see what’s in it for them?

    As John said, retail competition in electricity has largely failed in Australia. This is frustrating because with smarter (not necessarily more) regulation I think it needn’t have. Unlike the generation and – especially – distribution parts of the NEM, which had gross inability to adapt to change built in from the start.

  17. @derrida derider

    How on earth do they expect to overcome resistance to smart meters if people can’t see what’s in it for them?

    That’s a really hard one, innit. Of course they could just get the State government to make laws requiring that everybody has smart meters installed, and then send people around to install them whether you want it or not.

    Like they did in Victoria, for instance. I have a smart meter – of an old and now obsolete kind, but of course – because that’s what happened, and the cost was put on my electricity bill so if i didn’t pay, I got disconnected (really easy to do with a smart meter so I’m informed). I have never had any value out of it at all.

  18. GrueBleen :they could just get the State government to make laws requiring that everybody has smart meters installed, and then send people around to install them whether you want it or not.

    The progressive state of NSW would never stoop to mandating smart meters, we’re a democracy don’tchaknow. Instead we just make it a condition of any new work done on the metering or supply. Completely voluntary, you can have a smart meter or you can forgo electricity.

    When we had solar installed they put in the smart meter, I spent a few hours chasing different people and eventually was posed a 1/3 A4 “brochure” that explained that smart meters are wonderful and exciting and new and do really cool things. But I never managed to find out any of the things it does from the authorities, and the display on the front is basically hopeless. I can get net import and export values, that’s about it.

  19. @Moz of Yarramulla

    Completely voluntary, you can have a smart meter or you can forgo electricity.

    Right ! And was the cost of purchasing and installing your smart meter put on your electricity bill so that it was also “pay for it or forgo electricity” ?

  20. @GrueBleen

    Of course it was. The company that owns the grid is not a charity, it’s a source of non-tax income for the state government.

  21. Just reading Hansard of Senate Question Time on 21/3/17 where the odious Brandis said the High Court held as constitutional the Qld. Newman/Bleijie VLAD laws[ Kuczborski v Qld. 2014 HC] .This plainly is wrong as the High Court ruled it need not decide as the applicant/bikie had not been charged he had no STANDING to seek a ruling as there was no right of his affected. Is this ignorance or dishonesty ? I suggest in light of Brandis’ recent performance in the Justin Gleeson SC matter on the Legal services Direction eg. where a Senate/Committee found Brandis lied to parliament, the case against Georgie looks good. For the anti-LNP forces lets hope Brandis remains where he is for the amusement of seeing the performance of this pretentious odious “lawyer” his presence only damaging the tenuous standing Malcom in his precarious position with all including his own side.

  22. @Moz of Yarramulla

    …it’s a source of non-tax income for the state government.

    And in my case, it’s a source of low-tax income for United Energy (which apparently owns, or at least operates, the bit of the grid that services me). Thus, between us, we have provided a complete answer to Derrida Derider’s question:
    How on earth do they expect to overcome resistance to smart meters

    Is simple, yes, as always when in doubt, force majeure prevails.

  23. @david

    Is this ignorance or dishonesty ?

    My guess is both, with a quotient of incompetence thrown in. Brandis is a disgrace and an embarrassment both to the government and to the country as a whole. He should be defenestrated.

  24. Tim “defenestrated” I love [German fenster means window I assume defenestrated means out of the window!]. For the moment I prefer to see a turd unflushed if it makes the haven of its supporters uninhabitable.

  25. @david
    Yes, I agree there’s a certain benefit to Brandis remaining in his position as long as his incompetence prevents him from doing any significant harm. That seems to have been more-or-less the case so far.

    Re: ‘defenestrated’ – yes, the word literally means ‘thrown out of a window’. It can also colloquially mean dismissing someone from political office, but with regard to Brandis either meaning suits.

  26. @Tim Macknay

    Re: ‘defenestrated’

    One of Arthur C Clarke’s best short stories: ‘The Defenestration of Ermintrude Inch’ from the collection titled ‘Tales From the White Hart’.

  27. A recently paper in the Journal of Planning Education and Research, Pedestrians, Autonomous Vehicles, and Cities by Adam Millard-Ball, makes an interesting point about driverless cars using game theory.

    Currently, pedestrians play a game of chicken with cars that includes severe personal injury in the trade-offs. Pedestrians push drivers to slow down for them and drivers push back with near-misses and hits. We can be reasonably sure that driverless cars won’t have the onboard algorithms to take the outa-my-way-scum approach to pedestrians. This shifts the right of way game in favour of pedestrians. In a mixed environment, human drivers would be forced toward the same norms.

    It should result in cities that are more pedestrian-oriented, which is arguably a good thing. It could also make vehicle travel slower and perhaps even unworkable with some imperious pedestrian populations. It might eventually result in jaywalking laws being dusted off and revamped.

  28. @GrueBleen

    One of Arthur C Clarke’s best short stories: ‘The Defenestration of Ermintrude Inch’ from the collection titled ‘Tales From the White Hart’.

    I’ll look it up. It’s a very Philip K. Dick-esque title for an Arthur C. Clarke story.

  29. @Jim Birch

    This shifts the right of way game in favour of pedestrians.

    Only if, in fact, the “self drive” software is capable of understanding the vagaries of human pedestrians, and there’s no indication that it is so far, or ever likely to be.

  30. @GrueBleen

    (fiction, ad) Little old lady bangs on the front of a car, setting off the airbags. I suspect that like those systems, self-driving cars will tend to err on the side of caution. And counter to your point, we already hear of people “testing” the various pedestrian-avoidance systems and getting injured.

  31. @GrueBleen

    To me that suggests that (some) pedestrians already consider the self-driving cars safe enough to stand in front of. Remember that cars are already insanely dangerous and one of the leading causes of death. But people love them. So not only is there a very low bar to clear, in this area “understand pedestrians” amounts to “don’t kill too many of them”, rather than the philosophical “completely understand the vagaries of pedestrians” (AFAIK that’s an impossible standard – no humans meets it, for example).

  32. GrueBleen,

    Computers relentlessly improve. I don’t see how anyone can believe otherwise. In 1970 analysing a second of speech took an hour on a mainframe computer now, and your phone does it pretty well in real time. Your phone might be like twice as powerful as a CRAY-2 but there has been sequential improvements in algorithms that are the key difference. The story is repeated across every problem that gets tackled. Computer haven’t reached HAL 9000 capabilities (yet) but this is not required.

    Drawing arbitrary lines and saying technology won’t cross them – especially technology like computing that that has minimal hard physical constraints – seems wildly parochial to me. Given what we know about the human decision-making process it seems to me quite possible that the car will end up knowing what the pedestrian will do better than the pedestrian themselves. And the car doesn’t have to be perfect, it just has to be better than the median bad driver.

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