You´d be hard put to find a better illustration of the old chestnut about the EMH economist whose friend tells him there´s a banknote lying in the road:
Can't be. If there was a bill on the ground, somebody would have already picked it up.
Where to begin? Most normal people would say: that´s another nail in the already well-sealed coffin of the EMH. But faced with indisputable facts about solar market prices and installation quantities, Cowen´s response is: where´s the solar boom or fossil bust in asset prices? He can´t see one, so the facts must be wrong, or more politely epiphenomenal noise. Note that the objection is not based on any falsifiable hypothesis about solar PV, such as: Germany will have to cancel its solar PV feed-in tariff as unaffordable, silicon feedstock supply will hit a new bottleneck like the one that kept prices from falling in 2004-2008, solar PV will turn out to cause cancer, impotence and obesity or at least will be thought to do so. (Now there´s a hot tip to the oil industry PR men: work up some scares.) For the record, while Germany did reduce its feed-in tariff, China has announced one.
You know, even after two years at Chicago, where like every professor tells you that same joke at least three times every semester, it never gets old, does it?
It's of course perfectly possible that markets are simply not recognizing the danger to fossil fuel stocks, and we are in for a very exciting disruption in the next ten years. (In which case, I am wrong about a carbon tax and other emissions controls; we should just wait eight years.)
On the other hand, it's also possible that people who trade those stocks for a living--some of whom may even be as smart as James Wimberly, have considered this possibility, and don't find it very likely. What might those reasons be?
1) Mindless trend extrapolation is hours of fun for the entire family, but it is incorrect at least as often as it is correct, and possibly more often.
Wimberly uses this graph:
And very possibly prices will keep falling, the way that microchips have. On the other hand, maybe they'll plateau. Wimberly points out that solar panels are fundamentally a manfuacturing business, not a resource business, which is certainly promising . . . but the prices of other manufactured goods that experienced steep declines did not necessarily keep plummeting to zero.
2) Solar panel costs are not the only cost of a solar installation. According to the Energy Bible (which comports roughly with other figures I've seen online), about half the cost, or a little more, of putting in solar panels comes from the cells. The rest comes from the other stuff you need: batteries, transformers, wiring, and labor. As far as I know, the cost of these things is not falling as fast as the cost of solar panels.
Assume that these costs have held relatively steady, with the labor component being the most unstable. Ten years ago, most of the cost of an installation would have been the solar panels. But as those prices decline, the installed cost (without tax incentives) will be increasingly dominated by labor and other materials. Assuming that that graph says what I think it does, that implies that even if cells become free, we'd plateau slightly north of the average electricity price.
3) There's a storage problem. Yes, intriguing things are being done with hot salt and so forth. But how attractive are the costs compared to home installations? What percentage of their total generation costs represent solar cells, versus labor and other things whose prices aren't falling so fast?
Putting the pieces together, our national battery occupies a volume of 4.4 billion cubic meters, equivalent to a cube 1.6 km (one mile) on a side. The size in itself is not a problem: we'd naturally break up the battery and distribute it around the country. This battery would demand 5 trillion kg (5 billion tons) of lead.
A USGS report from 2011 reports 80 million tons (Mt) of lead in known reserves worldwide, with 7 Mt in the U.S. A note in the report indicates that the recent demonstration of lead associated with zinc, silver, and copper deposits places the estimated (undiscovered) lead resources of the world at 1.5 billion tons. That's still not enough to build the battery for the U.S. alone. We could chose to be optimistic and assume that more lead will be identified over time. But let's not ignore completely the fact that at this moment in time time, no one can point to a map of the world and tell you where even 2% of the necessary lead would come from to build a lead-acid battery big enough for the U.S. And even the undiscovered, but suspected lead falls short.
What about cost? At today's price for lead, $2.50/kg, the national battery would cost $13 trillion in lead alone, and perhaps double this to fashion the raw materials into a battery (today's deep cycle batteries retail for four times the cost of the lead within them). But I guarantee that if we really want to use more lead than we presently estimate to exist in deposits, we're not dealing with today's prices. Leaving this caveat aside, the naïve $25 trillion price tag is more than the annual U.S. GDP. Recall that lead-acid is currently the cheapest battery technology. Even if we sacrificed 5% of our GDP to build this battery (would be viewed as a huge sacrifice; nearly a trillion bucks a year), the project would take decades to complete.
But even then, we aren't done: batteries are good for only so many cycles (roughly 1000, depending on depth of discharge), so the national battery would require a rotating service schedule to recycle each part once every 5 years or so. This servicing would be a massive, expensive, and never-ending undertaking.
Moreover, while some sort of battery-replacement would help deal with the base-load problem (solar and wind are more variable than conventional sources, which means they have limited applications), they don't fix the transportation problem. Batteries are heavy and expensive, and as I understand it, absent some fairly radical breakthrough, they won't work at all in aviation; the energy density isn't high enough to permit the plane to take off. They're better for autos, but people don't want the limited range those vehicles currently offer.
4) To really take the market by storm, solar (plus storage) doesn't need to beat the average cost of electricity; it needs to beat the individual cost of each fuel type. DOE seems to think that by 2016 solar is still going to be a lot more expensive per kilowatt hour than other sources:
It's a pretty long haul before they overtake new coal--much less already-existing coal plants, or advanced natural gas.
The most obvious use for solar is as a replacement for expensive peak-load natural gas power (as I understand it, air conditioning causes most of the demand for these plants, so solar would be a nice complement.) But unless it gets massive subsidies, solar (including any storage mechanism you come up with) is going to have to individually defeat each type of electricity plant on price and/or availability, not "the average retail price of electricity"--which already includes some expensive solar and wind power.
Maybe that's possible--though that would still leave transportation to worry about. But that graph doesn't show it.
I'd close by restating Tyler's question in a slightly different way: if the price of solar is really likely to keep falling until it's cheaper than coal, why don't we see this revealed in the behavior of global warming activists? Where are Greens saying "We've decided to move on to more pressing issues, because clearly, the carbon emissions problem is just about solved."
If solar panels really become cheap enough to replace most electric generation, that will be extraordinarily disruptive, in ways that will be both good and bad for the environment. But I'm not seeing a shift away from climate change in order to focus more on, say, sustainable water-use or species conservation. Everyone seems just as worried about climate change as they've ever been, even though such cheap solar panels would render the issue mostly moot.
Revealed preference and market prices certainly can't tell you everything about the future. But they can tell you a lot about what people believe about the future.
A history of the first African American White House—and of what came next
In the waning days of President Barack Obama’s administration, he and his wife, Michelle, hosted a farewell party, the full import of which no one could then grasp. It was late October, Friday the 21st, and the president had spent many of the previous weeks, as he would spend the two subsequent weeks, campaigning for the Democratic presidential nominee, Hillary Clinton. Things were looking up. Polls in the crucial states of Virginia and Pennsylvania showed Clinton with solid advantages. The formidable GOP strongholds of Georgia and Texas were said to be under threat. The moment seemed to buoy Obama. He had been light on his feet in these last few weeks, cracking jokes at the expense of Republican opponents and laughing off hecklers. At a rally in Orlando on October 28, he greeted a student who would be introducing him by dancing toward her and then noting that the song playing over the loudspeakers—the Gap Band’s “Outstanding”—was older than she was.
And the bright side of rising pessimism about the American Dream
Updated at 3 p.m. ET
One of the hallmarks of America’s supposed exceptionalism is its citizens’ extraordinary optimism. A 2014 study found that Americans were more likely to describe their day as "particularly good" than any rich European country. Nothing reflects this sunniness like the enduring parable of the American Dream, the idea that, only in America, even the poorest can transform their fortunes through hard work.
But there is a dark and deeply ironic element to American dreaminess. Americans are “too optimistic” about the odds of poor citizens getting richer “relative to actual mobility in the U.S.,” according to a new paper by the economists Alberto Alesina, Stefanie Stantcheva, and Edoardo Teso. As a result, Americans are less likely to support large federal anti-poverty programs—programs that would actually help the American Dream become reality for more people—since they believe that they are already living among throngs of Horatio Algers.
Unlike past presidents-elect, Donald Trump hasn’t expanded his support since the election. His belligerent attitude toward his critics may be one reason why.
Donald Trump always seems most grounded in chaos. He thrives on contradicting his aides, surprising his allies, disparaging his opponents. He revels in the tempest.
This combustible approach has touched a chord with his base of primarily non-college-educated and non-urban white voters who have felt eclipsed both economically and culturally and slighted by the nation’s leadership. But he will arrive at his inaugural Friday facing more resistance in public opinion than any newly elected president in the history of polling, and with lingering clouds over his legitimacy—symbolized by the surprisingly widespread House Democratic boycott of the ceremony. Trump’s agenda is polarizing enough, but the intensity of that opposition appears rooted even more in his relentless belligerence toward any critical voice or institution.
More clues that the Facebook founder is eyeing a run for office
There’s a long-running theory that Mark Zuckerberg has presidential aspirations. It makes sense to wonder. After all, if the civically engaged and ambitious billionaire leader of the most powerful media company on the planet wanted to take on a new challenge, why not try running a country? It’s not like he has many other opportunities for a promotion.
But only in recent weeks has a Zuckerberg run for the American presidency started to seem like a legitimate possibility. First there was his personal challenge for 2017: Zuckerberg’s aiming to visit and meet with people in all 50 states by the end of the year.
And not just that, but he framed the exercise in a way that sounds, well, political: “Going into this challenge, it seems we are at a turning point in history,” he wrote in a Facebook post. “For decades, technology and globalization have made us more productive and connected. This has created many benefits, but for a lot of people it has also made life more challenging. This has contributed to a greater sense of division than I have felt in my lifetime. We need to find a way to change the game so it works for everyone.”
This lack of discussion of civil-rights issues at the hearing was glaring, but it may be in line with DeVos’s advocacy of school vouchers and other school-choice programs in her home state of Michigan. As Kimberly Quick, a policy associate at the Century Foundation, notes, “Both historically and currently, voucher programs have served as a means for wealthier and white families to flee an increasingly diverse public school system, moving into largely unaccountable private schools that can exclude students based on a number of factors.”
“Trump is absolutely trying to attack our democratic institutions and to make the country more authoritarian,” one Democratic lawmaker warns.
A steadily growing number of congressional Democrats are refusing to attend Donald Trump’s inauguration, sending a message of resistance at the outset of Trump’s presidency. It’s less clear, however, what exactly that message is, and whether it will do the Democratic Party much good as it attempts to find its way in the Trump era.
The high-profile protest was galvanized by the president-elect’s rebuke of civil rights icon John Lewis as “all talk” and no action” over the weekend after the Georgia congressman said he does not view Trump “as a legitimate president” and did not plan to attend Trump’s inauguration. At the latest count, more than 60 Democrats in Congress have now announced they will not show up. Painting a bleak picture of what the country now faces, some Democrats warn that the incoming Trump administration could fundamentally erode American democracy.
Curfews, sports, and understanding kids’ brain chemistry have all helped dramatically curb substance abuse in the country.
It’s a little before 3 p.m. on a sunny Friday afternoon and Laugardalur Park, near central Reykjavik, looks practically deserted. There’s an occasional adult with a stroller, but the park’s surrounded by apartment blocks and houses, and school’s out—so where are all the kids?
Walking with me are Gudberg Jónsson, a local psychologist, and Harvey Milkman, an American psychology professor who teaches for part of the year at Reykjavik University. Twenty years ago, says Gudberg, Icelandic teens were among the heaviest-drinking youths in Europe. “You couldn’t walk the streets in downtown Reykjavik on a Friday night because it felt unsafe,” adds Milkman. “There were hordes of teenagers getting in-your-face drunk.”
The president-elect filled out his Cabinet on Thursday by nominating former Georgia Governor Sonny Perdue for agriculture secretary.
Updated on January 19, 2017
A day before his inauguration, President-elect Donald Trump has filled out his Cabinet.
Trump on Thursday morning announced the nomination of former Georgia Governor Sonny Perdue as secretary of agriculture, completing a search that took the duration of his presidential transition.
Perdue, who served as governor from 2003 to 2011, grew up on a farm in Georgia and earned a doctorate in veterinary medicine. “Sonny Perdue is going to accomplish great things as Secretary of Agriculture,” Trump said in a statement. “From growing up on a farm to being governor of a big agriculture state, he has spent his whole life understanding and solving the challenges our farmers face, and he is going to deliver big results for all Americans who earn their living off the land.”
For one thing, she’s never attended or taught at a public school.
Betsy DeVos is likely to be confirmed as the next secretary of education. There’s nothing unusual about the Senate supporting a president-elect’s choice to lead the U.S. Department of Education. But DeVos is a more controversial choice than nominees in recent memory.
At his hearing, the outgoing education secretary, John King, faced friendly questioning from the senators on the education committee in charge of moving nominations forward, including from the Republican chairman, Lamar Alexander. King’s predecessor, Arne Duncan, was confirmed in the Senate by a voice vote. It’s not just Democrats who have had easy confirmations, either. Both of George W. Bush’s education secretaries—Rod Paige and Margaret Spellings—were also confirmed by voice vote and received praise during their hearings from Republicans and Democrats alike.
Republicans love to blame the Environmental Protection Agency for some of the country’s economic woes. Is that a fair assertion?
It was in the early days of Ronald Reagan’s campaign for president that America first started frequently hearing the term “job-killing regulations” in response to an increasing number of environmental laws. Reagan criticized the Carter administration for doing a terrible job with the economy, and said these failures were related to Carter’s “continuing devotion to job-killing regulation.” Reagan used this phrase a lot on the campaign trail, according to Cary Coglianese, a professor at the University of Pennsylvania and the editor of Does Regulation Kill Jobs?
Within a few years, other Republicans had picked up the term. As Coglianese writes, California’s governor Pete Wilson in 1991 blamed environmental regulation for imposing “job-killing burdens” on the state’s economy, for instance, and Oklahoma Senator Don Nickles called Clinton-era rules “the most intrusive, expensive and job-killing regulation handed down.” Michele Bachman, the congresswoman from Minnesota, in 2011 said she wanted to rename the Environmental Protection Agency “the job-killing organization of America” and Mitt Romney lamented that “Day by day, job-killing regulation by job-killing regulation, bureaucrat by bureaucrat, this president is crushing the dream.”