West facing solar panels

John Quiggin37 Comments

There was a bit of a fuss on the US web late last year about whether solar panels should face south (that is, towards the path of the sun) or west (towards the setting sun). One point that emerged is that, while the electricity generated by west facing panels during the afternoon peak is more valuable, that isn’t reflected in the prices paid by consumers.

But thinking about the situation for new installations in Queensland, and particularly North Queensland, the case for facing west looks strong. The first thing to observe is that, in the tropics, the sun is in the south in summer and the north in winter, so there’s not a lot of benefit in choosing one or the other.

Second, Ergon now has a “time of use” tariff, to be used in conjunction with a “PeakSmart” airconditioner, which has a peak rate of 34c/kwh between 4 and 8 pm on weekdays. That’s almost as good as the 44c feed-in tariff that used to be on offer, and massively better than the 8c rate available to new installations. Even the shoulder rate of 24c is way above the feed-in tariff So, if you are installing panels, you really want to maximize your own consumption and minimise the amount fed back to the grid.

My first cut at a calculation suggests that, with this tariff, solar PV looks pretty good. Assume a cost of $2/watt installed, which is common for large systems, and suppose that, with the western orientation you get 1000 hours a year, equally divided between shoulder and peak. That is, each installed watt of capacity saves you 1 kwH/year, at around 30 c/kwh, for a 15 per cent rate of return. Even if you add back the 70c/watt or so saved by virtue of renewable energy credits, the return is still above 10 per cent.

Feel free to point out arithmetic or parameter errors here.

Climate denial and the decline of the IPA

John Quiggin43 Comments

The Institute of Public Affairs has long been a major source of anti-science climate denial, following naturally from its earlier role as the leading denier of the health risks of passive smoking. While intellectually disreputable, this aspect of the IPA’s output seemed not to pose a problem for its broader role as an advocate of market-oriented economic policies. Indeed, given the frequency with which free-market economics and anti-science nonsense on all sorts of issues go together, the two seemed like a comfortable fit.

Over time, however, major corporations have become more wary of being linked to climate denialism, with the result that the IPA has become increasingly dependent on wealthy private donors like Gina Rinehart and Rupert Murdoch, whose definition of “free market” appears to be “lots of free stuff for Gina and Rupert”. In particular, Rinehart and her front group Australians for Northern Development are pushing the federal government to offer a tax holiday for Northern Australia, where most of her business interests are located. The IPA has delivered in full for Gina, including

* Joint work with ANDEV pushing the case for massive tax expenditures
* Prominently announcing that Ms Rinehart, arguably Australia’s greatest corporate welfare queen, had received a “2012 Visionary CEO Award”[1].

To get a feel for the kind of nonsense the IPA is now espousing, listen to this interview with the head of ANDEV on RN Bush Telegraph. It’s a display of rent-seeking that would have been considered brazen back in the days of ‘protection all round’. Particularly absurd, and offensive, is the suggestion that an income tax holiday designed to attract lots of (non-indigenous) workers to Northern Australia will somehow benefit the indigenous community.[2]

Of course, as long as Tony Abbott is in office, the fact that the IPA has lost all intellectual credibility won’t be a problem. But in the long run, the embrace of climate denial is exacting a high price for the IPA, as for US counterparts like Heartland.

fn1. I can’t find anything about this award on Google, except for an apparently unrelated gong given by a US outfit call qad.com. It appears to be an instance of the Montgomery Burns Award for Outstanding Achievement in the Field of Excellence, except that IIRC, Burns gave the award to Homer, not himself.
fn2. Compare Rinehart to Andrew Forrest, who at least makes efforts to employ indigenous people, and criticises Rinehart for not doing the same.

She who pays the piper

John Quiggin60 Comments

I’ll be on Radio National Bush Telegraph this Friday, talking about the proposals for massive tax expenditures on a “Northern Economic Zone” being pushed by Gina Rinehart, her lobby group Australians for Northern Development (ANDEV) and the Institute of Public Affairs, now heavily reliant on funding from wealthy individuals of whom Rinehart, directly and via ANDEV is the most prominent.

Back in 2000, the IPA was describing the Alice Springs to Darwin rail link, a heavily subsidised Public Private Partnership, as “the modern equivalent of the stupendously wasteful Ord River irrigation scheme“. This was one of the rare occasions on which I agreed with the IPA.

And it has historically been critical of deductions, rebates and other tax expenditures, correctly describing them as a disguised form of public spending
. Again I agree. It’s very rare to find a tax subsidy that achieves a public policy goal more cost-effectively than direct spending.

Having been exposed to Ms Rinehart’s persuasive mode of argument, the IPA has changed its tune, and plays a melody sweeter to her ears. It’s now fully on board with dams, tax subsidies to promote Northern development, and even special visa conditions on migrants, a policy that ought to be repugnant to libertarians of all kinds.

I’ll be interested to see how the IPA reconciles its former free-market line with its current position as advocate for yet more subsidies for someone who is arguably the world’s greatest welfare queen.

Bolt and the right to be a bigot

John Quiggin104 Comments

The ABC News report on the government’s legislation to repeal section 18C of the Racial Discrimination Act, motivated by the Bolt case, makes interesting reading. Foreshadowing the legislation designed to prevent future cases of this kind, AG George Brandis notes that it defends “the right to be a bigot“.

Brandis didn’t draw the obvious implication, but he didn’t have to. Bolt has made a career out of pandering to the bigotry of his audience. As with others in the crowded field of rightwing journamalism, it’s not clear whether Bolt himself is a bigot, or whether he just plays one on the Internet, but the act is loud enough to please his ignorant and bigoted readers, and skilful enough to earn him plenty of friends among people who should know enough to be ashamed of themselves.

I don’t have a fixed view on the legislation in question, but my feeling is that racial bigotry should, at the least, be an aggravating factor in cases of individual defamation. If that rule were applied, the plaintiffs in the Bolt case would almost certainly have received substantial damages in individual defamation actions, given the findings that Bolt’s racially loaded claims about them were factually false and “not made reasonably and in good faith”.

Update I should have mentioned that “bigot” is a euphemism for the R-word, which our defenders of free speech insist must never be applied to anyone, with the exception of one person who is excluded here by virtue of Godwin’s Law.

Social security won’t be around long enough for me to collect it (crosspost from Crooked Timber)

John Quiggin13 Comments

Salon has a couple of interesting articles about US millennials. Tim Donovan focuses on the plight of young people without college education who are suffering the combined effects of long-term growth in inequality and the scarring that comes from entering the worst labor market in at least a generation[^1]. Elias Isquith has a piece debunking Rand Paul’s prospects of pulling the millennial vote (I’ve seen a few of these lately, which may or may not mean anything), which includes the following observation

Despite the fact that a whopping 51 percent of millennials believe they’ll receive no Social Security benefits by the time they’re eligible, and despite the fact that 53 percent of millennials think government should focus spending on helping the young rather than the old, a remarkable 61 percent of young voters oppose cutting Social Security benefits in any way, full stop.

The idea that “Social security won’t be around long enough for me to collect it” is a hardy perennial, and thinking about it led me to the following observation:

It’s now possible for someone to have spent their entire working life believing that Social Security would not last long enough for them to receive it, and now to have retired and started collecting benefits. This belief has been prevalent at least since the early years of the Reagan Administration when it was pushed hard by David Stockman, and I’m going to date it to the first big “reform” of the system in 1977. Someone born in 1952, who entered the workforce in 1977 at the age of 25, would now be turning 62 and eligible to collect Social Security.
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King Cotton is dead, long live King Gas

John Quiggin32 Comments

I have a post up at The National Interest, arguing that embargoes imposed by commodity export countries in pursuit of geopolitical objectives rarely, if ever, work. Opening paras:

At the beginning of the Civil War, the leaders of the South were, as is normal at the outset of war, confident that their superior military prowess would yield a rapid victory. But the Confederates had another reason for confidence: their possession of a near-monopoly in the market for the most important commodity of the day: cotton.

Like oil in the twentieth century, cotton was vital to the industrial economies of the nineteenth, and particularly that of Britain, the preeminent naval and military power of the day. And the Southern United States was the world’s dominant producer of cotton, accounting for 77 percent of British imports in the 1850s.

Rhetoric about ‘King Cotton’ matched the most hyperbolic claims about ‘energy superpowers’ to be heard today. In 1858, South Carolina senator James Hammond said ‘old England would topple headlong and carry the whole civilized world with her…. No, you dare not make war on cotton. No power on earth dares to make war upon it. Cotton is king.’

The most immediate application, obviously, is to Russia and gas. Feel free to discuss the broader issues raised by the Ukraine crisis.