Why energy storage is a solvable problem

Most discussion of energy storage that I’ve seen has focused on batteries, with occasional mentions of pumped hydro. But in the last week, I’ve seen announcements of big investments in quite different technologies. Goldman Sachs just put $250 million ($US, I think) into a firm that claims to worked out the bugs that have prevented the use of compressed air storage until now

And several companies are working on gravity storage (raising and lowering massive blocks) to store and release energy

Underlying these points is a crucial fact in physics/engineering: Any reversible physical process is an energy storage technology.

That’s why concerns about the variability of wind and solar power will come to nothing in the end

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In defence of presentism

I was planning a post with this title, but after some preliminary discussion, a commenter on Twitter pointed me to this piece by David Armitage, which not only has the title I planned to use[1], but a much more complete and nuanced presentation of the argument, as you might expect from the chair of the Harvard history department.

I won’t recapitulate his points, except to make an observation about disciplinary differences. The dominant view in history described by Armitage as “professional creed: the commitment to separate the concerns of the present from the scientific treatment of the past” is identical, with a slight change in terminology, to the central claim of “value-free economics”, that it is possible to separate the positive science of economics, from the normative question of what economic choices should be made. [2]

What’s striking here is that the idea of “value free” economics has been the subject of severe criticism for decades, starting in the 1950s with Gunnar Myrdal [3]. Hardly anyone now puts forward claims of this kind in the strong version presented most notably by Milton Friedman. This view is routinely denounced as a residue of “logical positivism”, an pejorative with much the same valence as “Whig history”, except for a reversal of sign.

Armitage’s defense of presentism runs along very similar lines to the critiques of value free economics. Most notably, he observes

can we plausibly deny that we choose our subjects according to our own present concerns and then bring our immediate analytical frameworks to bear upon them?

Referring to history specifically, he says

only history—again, only our individual experiences and that collective record of the human past in all its forms, from the cultural to the cosmic—can supply the information and the imagination to shape our choices, in the present, among multiple potential paths into the future. If historians too freely use presentism as a slur or as a taboo, then we may be guilty of depriving our readers, and indeed ourselves, of one valuable resource for promoting human flourishing: history.

One point Armitage doesn’t discuss but which seems critical to me is that, if historians reject presentism, they seem to be disqualified, at least qua historians, from saying anything useful about the present. It’s impossible, for example, to talk about (or even to name) last year’s insurrection without bringing in terms and ideas that are value-laden.

But, looking backwards, when does the present stop and the past begin? Should Thatcher and Reagan be regarded as people of their times, exempt from critical judgement? What about their opponents and supporters who are still living? Should historians treat their (or rather, our, since I’m among the critics) actions in the 1980s as objects of study, disregarding our own belief that our concerns then are just as valid now.

Similarly, if it’s appropriate to condemn Donald Trump’s racism now, does it make sense to view the same racism, as expressed by Trump in the 1960s, as a morally neutral product of the times?

And given the fact that generations overlap, there’s no obvious end to this. How should we think about the relationship between Donald Trump and Roy Cohn, or between Cohn and Joe McCarthy?

None of this is to say that people should be judged according to our own local and temporal standards, without reference to their own circumstances. The racism of a privileged New Yorker like Trump says a lot more about him personally than the same attitudes held by a poorly educated white farm worker in Mississippi. Similarly, there’s a big difference between attitudes expressed at a time when nearly everyone accepted them to the same attitudes expressed when they are widely condemned.

But the idea of a value-free social science has been tested to destruction in fields like economics. It is no more defensible in history.

fn1. I didn’t mention this in my tweet, which focused on the contrast between economics and history
fn2. There’s a similar debate in political science, but I don’t think the “value free” approach ever gained the same dominance as it had economics
fn3. This was only 20 years after Butterfield’s denunciation of “Whig history”, which seems to have carried all before it among historians

Myths that stir trouble in the South China Sea

Just before Christmas, I published a piece in The Interpreter (Lowy Institute) arguing that most of the claims made by the contending parties in the South China Sea are myths designed to promote the interests of nationalists and militarists in a variety of countries, including Australia. Final paras

The mutual sabre-rattling associated with South China Sea mythology is beneficial to a variety of actors in the United States, China and elsewhere. The military-industrial complex, against which President Eisenhower warned 60 years ago, is powerful in every country, and always seeks to promote preparation for large-scale war as well as the routine use of military power for political and commercial ends. Nationalist politicians promote territorial claims of all kinds, and exaggerate their importance. And both Chinese and Taiwanese governments have good reasons to keep the idea of an invasion of Taiwan alive.

Unfortunately, these myths are not harmless. The possibility that the United States and China will somehow blunder into war is ever-present. And if such a war broke out, Australia would have a choice of bad options: either a disastrous war with its biggest trading partner or a breach with its most important ally. Rather than joining the alarmist chorus, the government should be seeking to reduce tensions.

The week before Christmas is traditionally a time to publish for those who want to avoid attention, so my timing wasn’t ideal. But in the New Year there has been a bit more interest. I was interviewed by CNBC Asia and Radio Free Asia, and there have been a few republications/

Open thread for 2022

Write about your hopes, fears, predictions for the coming year.

Usual comment rules apply. I’m going to be cracking down hard on snark this year, so if you’re in any doubt about your response to another commenter, don’t post it.

Getting it wrong on the future of US democracy ?

As I indicated in my previous post about self-driving vehicles, I’m trying to think more about where I’ve gone wrong in my analysis of current issues and trends, hoping to improve. I got some useful comments on that issue, though nothing directly applicable to my bigger predictive failures

The most important such failure has concerned the future of democracy, where my views were characterized by clearly unjustifiable optimism (see here and here). I’ve now shifted to extreme pessimism, but I would love to be convinced I’ve overcorrected, as I have done in the past.

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The case for public ownership of equity and of enterprises

I’ve written a couple of posts about Labor’s social housing fund, showing that it’s smaller than it appears, and that hypothecation (linking housing expenditure to the fluctuating proceeds of an investment fund) is bad policy. But is the underlying idea sound? This is a complicated question, and the answer takes us back to the mixed economy of the mid-20th century

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Hypothecation and housing

In my first post on Labor’s $10 billion housing fund, I pointed out that the $10 billion number is misleading.  The key idea is to borrow $10 billion at the low rate of interest payable on government debt, invest it in higher-yielding assets and use the profits (maybe $400 million a year, based on historical average returns) to finance social housing. The same model has been used by the LNP government to set up funds for a variety of purposes. There’s a total of $50 billion across five funds, the biggest of which is the Medical Research Future Fund of $22 billion, twice the size of Labor’s housing fund.  

All of these off-budget funds are managed by the Future Fund, which was established to offset the government’s unfunded superannation liabilities, and is currently just below the target level ($200 billion in the fund vs target of $215 billion).  The Future Fund can be seen as matching off-budget assets and liabilities

I’ll look at the general idea of sovereign wealth funds in a later post.  A separate question is whether it makes sense to allocate the proceeds of a particular source of revenue (the fund) to a particular policy objective (social housing). In the jargon, this is called hypothecation.

Economists generally dislike hypothecation, but it’s often a harmless way of making the link between revenue and expenditure clear. For example, some road projects in Queensland are funded by the revenue from speed and red light cameras. That encourages law-abiding motorists to think positively about the idea, and weakens the position of dangerous drivers complaining about ‘revenue raising’.

But the housing fund has no such merit. To the extent that the hypothecation is genuine, it means that the money available for social housing depends on the performance of the share market. And this dependence is the wrong way around. The case for public spending on social housing is strongest, both in terms of need and the availability of resources, when the economy and the share market are doing badly.

The Housing Fund is, quite simply, a poor substitute for direct public expenditure.

Labor’s $10 billion social housing fund: the frill necked lizard of Australian public expenditure

Following my cri de coeur about the limited scope for progressive analysis now that Labor has adopted almost the whole of the LNP economic program, I got a number of useful suggestions, one of which was a detailed analysis of Labor’s most prominent spending initiative, the $10 billion social housing fund. This idea raises a lot of issues, so I’m going to tackle it a bit at a time

First up, is $10 billion a lot, or a little? There was a time when programs like this were typically described in terms of the annual expenditure they entailed. If that were still the case, the program would be a really big deal. With cheap publicly-owned land and scale economies, $10 billion a year would probably enough for 40 000 homes at $250k apiece. Compared to around 200 000 a year being built privately, that would make a big difference.

But it’s been a long time since the conventions of annual budgeting were observed. The standard procedure now is to quote spending over 4 years (the arbitrarily chosen period of forward estimates in the budget) and the LNP government has occasionally extended this to 10 years, which is absurd given the rate at which things change..

Even $10 billion over four years would still be a big deal however, enough to reinstate social housing as a major part of public policy.

Sadly, the crucial word here is “fund”. Labor isn’t planning to spend $10 billion. The idea is to borrow $10 billion, invest it in high-yielding assets and use the profit (the difference between the market rate of return and the government bond rate) to finance social housing. I’ll have lots more to say about this, but for the moment what matters is the amount that can be raised in this way.

The standard estimate of the “equity premium” is around 4 percentage points, meaning that the government could borrow at 2 per cent and plan to earn a 6 per cent return on average. That yields net earnings of $400 million a year, enough, on the calculations above, to pay for 1600 homes. That would be nice for the people who got off the waiting list, but not really a big deal.

Back in the day, the frill-necked lizard, which can make itself look a lot bigger than it really is, was briefly a popular meme, particularly in Japanese anime circles. Labor’s $10 billion fund is the frill-necked lizard of public expenditure policy.

Getting it wrong on self-driving vehicles (crosspost from Crooked Timber)

A few years ago, I got enthusiastic about the prospects for self-driving vehicles, and wrote a couple of posts on the topic. It’s now clear that this was massively premature, as many of the commenters on my post argued. So, I thought it would be good to consider where and why I went wrong on this relatively unimportant issue, in the hopes of improving my thinking more generally.

The first thing I got wrong was overcorrecting on an argument I’d made for a long time, about the difference between radical progress in information and communications technology and stagnation in transport technology. The initial successful trials of self-driving vehicles in desert locations led me to think that ICT had finally come to transport, when in fact only the easiest part of the problem was solved.

There was also an element of wishful thinking. As commenter Hidari observed, the most obvious use of self-driving vehicles is to provide mobility for 75+ Baby Boomers. As someone approaching that category, and having never liked driving much, this is an appealing prospect for me. And I liked the idea of taking other bad drivers’ hands off the steering wheel.

That framing of the issue is very different from the way a lot of commenters saw it. Should self-driving cars be seen as automated taxis, and if so is automation desirable or not? Is any improvement in car technology a distraction from the need to shift away from cars altogether? I don’t have good answers to these questions, but they indicate that resistance to self-driving cars won’t be purely a matter of technological judgement.

Finally, having put forward a position, I am usually tenacious in defending it. Within limits, that’s a good thing, particularly in the context of a blog where the discussion doesn’t have any direct implications for what happens in the world. It’s good to put up the strongest case, and test it against all counter-arguments. But that approach carries the risk of being obstinately wrong.

I’m hoping discussion here will help me deal with more consequential errors of judgement I’ve made. So feel free either to discuss the original question of self-driving vehicles or the broader issue of how to think about mistakes, and particularly mistakes I’ve made.