In the NY Times, Paul Krugman makes the case that too much choice (particularly about retirement investment) can be bad

Ani Guerdjikova and I demonstrate this with lots of algebra

Here’s the draft introduction for The Economic Consequences of the Pandemic. Comments, criticism and congratulations all appreciated.

My submission on the Morrison government’s misconceived energy strategy

Update: An expanded version of this post has now been published at Inside Story

By special request from regular commenter James Wimberley (and with some suggestions from him), some thoughts on the failure of the Texas electricity market to deal with unexpected cold weather.

Texas lost power when neighboring states, which also experienced the freeze did not. This is part because it has a mostly separate electricity grid. The Texas Interconnection has been kept separate from the rest of the US grid deliberately, to ensure that it remains under Texas not Federal control. That means that Texas couldn’t draw on electricity from the major power pools, notably the Southwest Power Pool.

The reason Texas was kept separate was so that it could replaced traditional integrated electricity supply with a pool market for electricity generation, combined with competitive retailing and lightly regulated transmission and distribution. This was run by ERCOT, the Electric Reliability Council of Texas (a name with plenty of irony right now), Interestingly, Australia is a mirror image. The National Electricity Market was set up on the pretext that it was necessary to manage the National Grid, which connected systems in Eastern Australia from the 1990s onwards.

The US ought to have a single national physical grid, as most of Australia does. The benefits of interconnection increase with greater need for reliability, greater total requirements for electricity (as transport is electrified) and an increased role for time-varying generation from solar and wind. The costs of interconnection have fallen with technological progress including (over long distances) the option of high-voltage direct current (HDVC) transmission.

A lot of people have suggested that the electricity market doesn’t provide incentives for reliable supply. Others (with some overlap) have commented adversely on the fact that the price of electricity rose to $9000/MWh during the freeze (average is around $30/MWh). The correct analysis is more subtle. The idea of a pure electricity market is that the prospect of getting high prices when everyone else has shut down would provide an incentive to maintain reliable supply.

Electricity only market seen as not providing adequate incentives for reliability. But ultra-high peak prices are supposed to provide those incentives. Max of $9000/MWh too low, not too high.

Switch from vertical integration to pool market good for renewables. An inherent result of markets, or just that disruption of any system favors shift to more efficient technologies?

(I’m going to edit this bit by bit, without noting updates)

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I’ll be appearing (virtually) tomorrow, Monday 1 February to give evidence to the  the House of Representatives Standing Committee on the Environment and Energy’s inquiry on Zali Steggall’s Climate Bills 2020, the core of which is a proposal to set a target of zero net greenhouse gas emissions by 2050. As readers would expected, I’ll be supporting the bill.

At almost exactly the same time, Scott Morrison is going to address the National Press Club, and there are rumours he’s planning an announcement on climate policy. Given the natural human desire to see patterns in the universe, and a little bit of past history[1] it immediately occurred to me that Morrison might announce that the government had decided to commit to 2050 net zero.

Such a decision would make great political sense for Morrison, if he focused on the objective situation rather than in-group loyalties. Now that Albanese has backed away from any firm commitment other than 2050 net zero, Morrison is in a great position to “dish the Whigs” by outflanking him, perhaps by adding in an upgraded 2030 commitment.

Equally importantly, the geopolitical need to act has become urgent. Biden has announced a major climate summit for Earth Day, 22 April, at which leaders will be pressed to enhance their commitments. The main target is China, where the push is to bring their 2060 target forward to 2050 and back it up with some firm action. But of the real laggards, with no zero commitment at all, Australia is the only one that isn’t already a pariah like Saudi Arabia and Brazil. Unless he wants a major international embarrassment, Morrison has to come up with something big, and soon.

This has largely unnoticed by our political class, who are still suggesting that nothing needs to be done until the Glasgow COP in November, and that an election can be held before then.

Read More »

As usual, 26 January has been marked by protests, denunciations of those protests, and further iterations. Even apart from the fact that it marks an invasion, the foundation of a colony that later became one of Australia’s states isn’t much of a basis for a national day.

A logical choice would be the day our Federation came into force. Unfortunately for this idea, our Founders chose 1 Jan 1901. The first day of the 20th century[1] must have seemed like an auspicious choice for a new country, but it ruled out the anniversary as a national day.

The ideal thing would be to fix the problems of our current system with a republican constitution including a treaty with the original owners of our land. That would provide a date really worthy of celebration.

In the meantime, I suggest 3 March, the anniversary of the day in 1986 when the Australia Act came into force, finally establishing beyond any doubt that Australia is an independent country, entirely separate from the UK[2]. We had by 1986 a constitution and public policy that was at least formally non-racist, thanks to the 1967 referendum and the end of the White Australia policy. Many of the symbolic problems with the current date would be avoided, though the real injustices would remain to be addressed.

It’s true that the Australia Act doesn’t have a lot of resonance. But any date with a lot of resonance is bound to resonate badly for a large proportion of the population. At least this would be a choice nearly all of us could celebrate without worrying too much about its precise significance.

fn1. At least if you start the count from 1CE. I think it would be more sensible to cross-label 1BCE as 0 CE, making 1900 the start of C20. I had always assumed that Dionysius Exiguus, who invented the AD calendar was unaware of the concept of zero, but Wikipedia accords him a prominent role in its history.

fn2. Whether, when and to what extent, we had become an independent country before 1986 remains a mystery, but there’s no doubt after that.

That was the headline I suggested for my latest article in Independent Australia. The editors went with the more informative “The Biden Presidency will usher in a time for change and Australia should follow“

Amateur political analysis ahead. What are the chances for bipartisanship under Biden. Roughly speaking, that means whose votes would he need to get to 60 in the Senate, requiring 10 Republicans

Repubs who have voted with Trump less than 75 per cent of the time
Collins
Paul
Murkowski
Lee
Romney
Of these, Paul and Lee have dissented mostly from the right

Next 5
Moran
Young
Dains
Scott
Sasse
Scott voted to overturn the election

Next 5
Toomey, Graham, Johnson, Hawley (!), Lankford

Need I say more

Source

Note: I excluded far-right Senator Lummins, who took her seat two weeks ago, and has cast hardly any votes