Wibble wibble from Friends of the Earth

How can they say this with a straight face?

No nuclear power station has been built without state cash – as our government recognises. No subsidies means no nuclear. Supporting nuclear means getting behind taxpayer-funded subsidies for, in George Monbiot\’s words, the \”liars\” who run the industry.

In contrast to the billions spent on nuclear, there remains real reluctance to invest in renewable energy. Only last week ministers cut support for small-scale renewable power. Their plans for electricity market reform will not support the development of offshore wind and other marine renewables.

It\’s entirely wibble, isn\’t it?

No, not the facts put forward, but the argument.

Nuclear requires subsidy therefore we shouldn\’t use it.

Meaning that we should now provide even greater subsidies for renewables because nuclear requires subsidy.

Yes, well done, here\’s a lollipop now go and play with the other children.

Do note that, not including this subsidy, nuclear produces \’leccy at about 10p per unit. Solar, including the subsidy, produces it at 46 p or so.

So, electricty production in the UK is around 400 TWh (2004 figure but good enough). Nuclear is 20% of this (again, good enough). 80 TWh. A TWh is 10*9 kWh.

Thus total production of nuclear in the UK, per year, is 80,000,000,000 kWh. So, if the nuclear subsidy were to be equal to the solar subsidy then the nucelar subsidy per year (ie, 80,000,000,000 x 36 p) would need to be £28,800,000,000 per year.

£29 billion a year.

As the general estimate is that the subsidy of the entire nuclear system over the past 60 years (yes, including all the bomb making n\’all, the R&D to work out how to do it etc) is estimated at £50-£100 billion, or £1.6 billion per year, that appears to make nuclear cheaper than solar by £25 billion a year.

Which is, when you come to think of it, a bit more than just chump change.

And this is just massively gorgeous:

By contrast, after just a few years\’ support in Germany, solar panels are expected to be producing power without the need for public subsidies.

That link is to an article from 2008.

At the solar industry trade fair in Munich over the weekend, there was growing confidence that the holy grail known as \”grid parity\” – whereby electricity from the sun can be produced as cheaply as it can be bought from the grid – is now just a few years away.

OK….

The market will probably expand another 40% this year,\” said Carsten Körnig, of the German solar industry association, referring to both PV and solar thermal systems, which produce hot water. He said his previous assumption – that grid parity would be reached in Germany in five to seven years – now looked very conservative since it allowed for only a 3% rise in electricity prices each year. In many countries increases of 20% a year are becoming the norm.

How excellent. OK, so the conservative assumption was that solar PV would have grid parity in 2013. But that\’s too conservative. It\’ll be shorter than that. Good, we\’re now in 2011….so grid parity has arrived, yes?

Excellent, so no more subsidy is needed, is it?

You really do have to be some kind of numpty to use the proof that you don\’t need subsidy any more as an argument for more subsidy.

And an idiot to not notice that that is what you are doing.

Raising the pension age: Hurrah!

How incredibly sensible:

In a move intended to halt the trend for workers to spend a growing proportion of their lives in retirement, the Chancellor announced a mechanism to raise the state retirement age automatically in line with life expectancy.

Yeeessssss!

In future, he said, regular, independent reviews should establish longevity rates, which would then be used to decide the state pension age.

Hurrah!

This is something I\’ve been banging on about for years (here\’s me in 2007 saying so and I\’m sure there are earlier examples I can\’t be bothered to find right now).

It\’s quite simple really. The old age pension is a form of social insurance.

We must distinguish between insurance and assurance. Assurance is a form of saving for something you know (or at least is highly likely to) will happen. Insurance is a form of protecting yourself against something that might happen.

Saving for your burial expenses is assurance (for despite those lost at sea etc, almost all of us will need to have our carcasses disposed of in some manner). Saving against the risk of your house burning down is insurance, as it doesn\’t actually happen very often.

When the old age pension was brought in it was insurance. Insurance against the risk of living too long.

There\’s some rational view that you can and should take of your likely lifespan. A reasonable one would be how long are the old people living currently?

Similarly, there\’s a rational view of the savings that you need to accrue during your working life: how long are the old folks living currently?

So, you rationally save that sum: and then you\’re exposed to the risk of living too long, of outliving your savings. It\’s a pleasant risk of course, even if not one that\’s all enjoyable: living longer is generally regarded as a good thing even if poverty isn\’t.

And this is what, when they were first instituted, those old age pensions were. Insurance against outliving that rational level of savings. I think (and can\’t be bothered to check) that Bismark\’s first effort pegged the pension age at above the average age of death. Lloyd George\’s was at about the average age of death.

Osborne\’s reform here is, while not specifically stating that it\’s exactly this, akin to doing what is necessary. Returning the old age pension to what it was and arguably should be. A form of social insurance against outliving your savings through the unhappy circumstance of living a long time, not assurance as it is now.

Oh, and for those who think this is some vile neo-liberal idea I should note that I\’ve taken the analysis and policy prescription wholesale from Brad DeLong. You know, that Professor of Economics at Berkeley, not a noted hotbed of vile right wing ideas.

Me saying much the same thing here.

BTW, no, just because I have been shouting in the wilderness that this is a good idea for years, that someone has actually implemented it does not mean that I think they have done so because of my shouting. Even as I insist that it\’s a good idea which I support, my ego isn\’t quite that large.

Stupid, stupid, windfall tax

Yes, I know that people like Compass have been shouting for this and yes, I know that I said it was stupid when they did. So I\’m still going to say it\’s stupid when it\’s a Tory that implements it:

The Chancellor announced a £2 billion-a-year windfall levy on North Sea oil to fund an immediate cut in fuel duty of 1p per litre. He also postponed a 5p rise in fuel duty due next month and introduced a fuel price stabiliser to keep costs at the pumps down.

Windfall taxes, most especially permanent windfall taxes (for you can argue that a one off one doesn\’t change behaviour) are simply massively stupid ideas.

So, what you\’re actually saying is, oooohh, my, isn\’t this thing expensive? Which is, of course, the same as saying that there isn\’t quite as much supply as you\’d like for it to be at a price you\’d like.

And what are you going to do about this? Yes, that\’s right, you\’re taxing the excess profits of those who supply it thus making them, and possible new entrants, less likely to go and find more, so as to increase the supply and bring prices down.

This is, you\’ll have to agree, fairly stupid.

What lifts is up into the realms of rampant lunacy is that the money so raised is going to be used to reduce the price of the fuel itself: that is, to increase demand.

So, our solution to prices rising because of tight supply and increasing demand is going to be further restricting supply and increasing demand.

This was cockeyed idiocy when Compass argued for it and it\’s cockeyed idiocy now that Osborne has done it.

Why are we ruled by fuckwits?

Mr Murphy and economic history

Never the twain shall meet.

I wonder if the BCC realise just how crass that comment is? They’re asking the government to carry on with its cuts that are sucking money out of the economy at a record rate. And at the same time they’re saying the government must deliver growth in demand and new jobs.

The BCC can have cuts or growth, but not both.

Surely they realise that by now?

And if not, shouldn’t they take a course in economics? Not neoliberal economics – but the economics of Keynes that got us out of recession in the 30s and are the only thing that could do so again now.

The economics of Keynes that Ritchie is referring to is of course the idea that there should be fiscal stimulus, government borrowing to spend in the economy so as to pump prime growth.

It\’s a lovely idea of course and it is exactly what the theory itself says we should do and should happen.

It\’s just that, with reference to the UK and the 1930s, there\’s no actual evidence of it working. The reason being that in the 1930s that isn\’t what the UK actually did.

You see, 1930s Britain did not run large deficits. They ran virtually no deficits at all (that\’s what did for Ramsey MacDonald you see?), did not increase public spending and even the national debt only rose 5% (5% of the national debt that is) and that was more of an effect of screamingly high interest rates to protect the gold standard than anything else.

What the UK actually did at this time was to come off the gold standard and allow the declining exchange rate to boost exports.

So, the lesson of the 1930s for us here in the UK is that the effects of a recession can be ameliorated not by splurging with borrowing and spending but by cutting the exchange rate.

No, I don\’t insist that this is the only way that things can be done: only that that is what we did in the 1930s and that it is true that the UK rebounded much more quickly than did the US which went the other way. We were back to peak GDP per capita by 1934, two years after the currency decline.

Might I therefore suggest a little economics course for Ritchie?

A tad of economic history perhaps? For if you\’re going to use the UK\’s 1930s experiences as your guide to what we should do now it would help if you actually knew what the UK\’s 1930\’s experience actually was.

Mr. Murphy and Local Authority bonds

What is he talking about here?

Economically what this country needs is a massive injection of money into local infrastructure to get employment going again and to lay the foundations for growth when the recovery happens. Some green initiatives would help no end too.

All this add up to one thing – and the answer is local authority bonds. They’re local. They encourage accountability. They are low risk but offer better returns than gilts and any bank. And they encourage local growth.

What’s more , if sold in sufficiently small blocks, they can be wrapped inside pension funds and Individual Savings Accounts (and this must be actively encouraged). Plus, they encourage saving with an explicit social return in the places where people live.

They’ll also help create jobs – which is what people want. And they’re cheaper than the Private Finance Initiative. And they break the stranglehold of the banks on infrastructure spending. Most important of all, they create a demand for local democracy.

All of which means that I want you to grant me just one wish George. Give me local authority bonds. Tomorrow.

One minor point is that he says that local authority bonds offer better returns than gilts.

So, umm, they are more expensive to a local authority than borrowing the money off central government who then issue gilts.

Not really what we want from a financing alternative really.

But to the major point. There\’s nothing stopping local authorities from issuing bonds right now:

Historically, municipal bond finance formed an essential part of the finance armoury available to local authorities in the UK and was used to fund large capital projects. It fell out of favour in the 1980s as capital controls were imposed by central Government to limit municipal spending. Local authorities have since regained the freedom to issue bonds but few have chosen to do so because they have had unlimited access to cheap long-term borrowing available from central Government, through the Public Works Loan Board. Last year, local authorities borrowed about £6.3 billion at the lowest cost seen in the past 50 years.

Oh. So they can do it then. And they don\’t do it even though they can: because, erm, as Ritchie has pointed out, doing so is more expensive.

Fundraising Fortnight

It being my birthday soon thought we\’d have a little test of how much you all love and desire this blog/me/righteous smiting of the ignorant etc.

No, I do not \”need\” money from you. I have managed, through a combination of business activities and writing here and there, to create an income stream which pays the mortgage(s), keeps us all fed and watered, even the five (remaining) cats and three dogs.

So the only possible reason you might have for sending some moolah my way is that this blog amuses you sufficiently that you actually desire to send me said moolah for me to upgrade my lifestyle a bit.

Perhaps the next steak dinner for two will be filet mignon (£30 ish around here) rather than bitoques (£15 or so). The next bottle of fizz champers instead of vinho verde. The next box of cigars decent Cubans (err, lots?) instead of who knows where Alvaro gets their tobacco from. The next car a Ferrari rather than a Ford (one can dream, eh?).

I do promise not to waste any of what is sent: none will be spent upon essentials, only luxuries.

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That Green Investment Bank thing

You what?

The GIB was a Conservative and LibDem manifesto pledge, and a coalition pledge. MPs on the environment audit committee made plain that only an independent bank that can borrow and issue bonds would be equal to the scale of the challenge. But Treasury officials have put up a fierce fight, not wanting to cede its control over government borrowing and adamant that allowing GIB borrowing is impossible, as it would add to the national debt. (The latter is an infuriating quirk of accountancy rules – GIB borrowing would not increase the UK\’s deficit – all money going out would be balanced by money coming in – but would count towards the national debt.)

What the hell is that supposed to mean? What misunderstanding of finance underpins this?

If the government borrows money the national debt rises. If a government owned body borrows money the national debt rises. If the government guarantees new debt then the national debt rises.

Because, you see, the taxpayers are on the hook to repay this debt: thus we add the new debt to the national debt which is, by definition, the amount of debt that the taxpayers are on the hook to repay.

Whether it gets added to the deficit is irrelevant.

And no, it doesn\’t matter what you spend the money raised through that debt on. Windmills, solar panels, council houses or current pensions: it\’s new debt, guaranteed by the taxpayer,  and so is part of the national debt.

Having abandoned a very sensible proposal to switch a per-passenger to a per-plane tax, discouraging empty flights, the government is now set to abandon a planned rise in the passenger tax.

The EU won\’t allow a per plane tax and APD already covers the externalities of flying.

If this is the level of \”green\” reporting that we\’re going to get on the budget…..

Informing The Guardian about matters nuclear

So the Fukushima plant had more spent fuel lying around than it should have done did it?

When disaster struck earlier this month, the plant contained almost 4,000 uranium fuel assemblies kept in pools of circulating water – the equivalent of more than three times the amount of radioactive material usually kept in the active cores of the plant\’s reactors.

Hmm, I wonder why that might be?

So, anyone know where the Sons of Nippon reprocess their fuel rods?

Yes, that\’s right, at Sellafield. You know, the place in Cumbria?

The place that Greenpeace et al (at least if my memory is working well this early in the morning) have been shouting mustn\’t be allowed to do such reprocessing?

I have to admit that I\’m not quite sure whether Greenpeace et als various manouverings have managed to slow down or delay such reprocessing….or whether Sellafield\’s own management has managed that all by itself.

But the Japanese reactor companies have had contracts with Sellafield, Sellafield hasn\’t been working as advertised and the reason for stockpiles at reactors in Japan of spent fuel is probably that fact that Sellafield isn\’t working as advertised.

Logic again, logic

This time it\’s the Low Carbon Kid. Talking about the costs of nuclear waste disposal he tells us that:

The last estimate for the cost of dealing with the waste and decommissioning of the U.K.\’s 19 reactors, by the National Audit Office in January 2008 was £73 billion over the next hundred years. This was 18% above initial estimates, and the costs of even near-term actions are still rising when they should have stabilised………The government has argued that new nuclear build should not be subsidised by the taxpayer and that companies should come up with a plan to manage the waste they create. They are currently allocating £1 billion per reactor.

But if I divide 19 into the 73 billion figure above I get nearly £4bn, not £1bn.

Oh, my. Well, what could one possibly say to this point? Well, if you look down the LCK\’s own post, you will see this:

But while the government pointed to this as the solution to waste from any new plants, CoRWM said it only meant this solution to apply to waste from Britain\’s old military nuclear programme dating back to the 1950s, so called legacy waste (see below for the link).

Ah.

Yes, you see, that £73 billion figure includes cleaning up all of the waste from the military programme. Plus all of the original development of the basic technology.

Now I don\’t expect non-experts to know all of these things. But I do expect people who mention both to have the wit to add the two points together.

To make it clearer, let us apply the same logic to wind power. He\’s saying that we should include the maintenance costs of a 12 century windmill, one we maintain for heritage reasons, in our calculations of how much it\’s going to cost us to build a new windmill today.

Doesn\’t really work, does it?

And this is just flat out wrong:

The truth is we don\’t yet know what to do with existing nuclear waste.

Of course we know what to do with it. Vitrification and burial. The only reason we don\’t actually do it is because we\’ve got hippies screaming that we shouldn\’t. Or lying and insisting that we still don\’t know what to do.

Will Hutton lectures us

On how we should do business and our wider, societal, responsibilities.

Hmm, for the Work Foundation, that charitable organisation he was driving when it went into bankruptcy:

Accounts for 30 Jun 2009:
326 days overdue

Annual Return for 30 Jun 2009:
326 days overdue

Do note,that\’s for the period before the bankruptcy, not the period with it in it.

The Tax Gap is falling!

Following the ‘corporate roadmap’ published by the Treasury in the autumn, Osborne could also introduce exemptions on profits from intellectual property and, crucially, exempt a large portion of overseas ‘finance income’ from corporation tax.

Many UK-based multinationals are already bending the rules by setting up financing subsidiaries in low-tax jurisdictions.

Profits are funnelled through these ‘treasury’ divisions, and are subject to lower rates of tax when the cash is moved back ‘on shore’. Richard Murphy, director of Tax Research UK, fears that tomorrow’s-Budget will ‘legitimise’ these ‘grey areas’.

As we know, Richard defines the Tax Gap as the difference between the rates (amounts) of tax actually paid and the rates (amounts) of tax that Parliament thought would be paid when they set the various tax laws.

So, Parliament is to clarify the law. What would be, under Richard\’s definition, part of the tax gap will now become the entirely righteous tax compliance, doing exactly as Parliament intended companies to do when they set the law.

The Tax Gap will therefore shrink.

Sadly though, the man who has been screaming about the iniquity of the size of the Tax Gap seems not to be welcoming this move to reduce the Tax Gap.

Nothing like consistency in a public intellectual, is there?

The stupid, it hurts!

Evidence that markets work is used as proof that markets don\’t work……ouch!

But, according to the classical economic theory that is still fetishised in some parts of the blogosphere, an organisation like CAMRA should be unnecessary. Markets react to supply and demand. If there is enough demand for traditional beer, so the story goes, new firms will enter the market to satisfy that demand. However, when you look at what firms actually do, rather than what the theory says they do, the reality of markets is different. In many sectors, firms adopt industry standards which enable them to promote their collective interests at the expense of customers.

And our flipchartfairytaleman goes on to insist that the very success of CAMRA is proof that markets don\’t work.

Sigh.

\”Markets\” are not some box that you open and then through some equivalent of Brownian, random, motion get a structured society. Hayek\’s \”spontaneous order\” acknowledges that humans have desires (which molecules really don\’t), agency (ditto) and the ability to cooperate.

Our spontaneous order is thus an outcome of people cooperating by using their ability to act, their agency, to achieve their desires. Rather than, say, those people being directed to do something, legislated into doing something or even commanded, whipped into or executed for not doing that thing….all, recall, methods of human organisation that have actually been tried.

Such combinations of desire agency and cooperation are legion in any society: no one has ever quite, despite Pol Pot having a damn good go, managed to stamp it out. In our own society, looking back into history, we can see peeps thinking about unemployment and sickness and the needs for communal support in such times: we got the Friendly Societies. The Co Op started out as mutual assurance (assurance note, not insurance) against the known to be coming but unknown time of arrival of burial expenses. The cost of building a house was too high to be managed without mobilising communal savings: thus the Building Societies.

Given that all of these, plus innumerable others, were the result of voluntary action they are market responses, not non-market responses.

Which moves us to CAMRA. Overbearing prigs they have become (as with those cheerleaders for the Building Societies like Our Chuka) but they too started out as humans voluntarily using their agency and ability to cooperate to achieve their desire: a pint that\’s worth drinking.

And thus, far from CAMRA (or any other such voluntary organisation or banding together) being something which should be unnecessary in a market economy, they are exactly the manner in which a market economy works: voluntary, not directed, cooperation to achieve the desired goal(s). That spontaneous order coming from the application of the innate human abilities to use agency and cooperation to achieve a collective desire.

Flipchartfairytaleman\’s argument is that exactly what makes markets work is proof that markets don\’t work.

Ooooh, the Stupid, it hurts!

The Guardian on radiation in Japan

My word, this is a surprise:

Many of their homes are inside the evacuation zone, with radiation 17 times higher than background levels and tap water too contaminated to drink.

17 times higher than background, eh?

As the excellent xkcd points out. General background level is 10 microsieverts a day. Extra radiation from being in one of the towns around the Fukushima plant is 3.5 microsieverts.

It\’s very difficult indeed to get to the 17 times background from there really.

Taxing the rich

Sounds sensible:

In a separate move, the budget will be used to announce plans forcing executives and celebrities who use private jets to pay air passenger duty for the first time.

Osborne plans to consult on the details but hopes the proposals will raise tens of millions of pounds.

In fact, it rather flabbers my ghast to realise that they don\’t already pay such.

Pigou Taxes are supposed to apply to all of a specific externality, not just some instances of them.

There is more joy in heaven etc

You will not be surprised to hear that the events in Japan have changed my view of nuclear power. You will be surprised to hear how they have changed it. As a result of the disaster at Fukushima, I am no longer nuclear-neutral. I now support the technology.

A crappy old plant with inadequate safety features was hit by a monster earthquake and a vast tsunami. The electricity supply failed, knocking out the cooling system. The reactors began to explode and melt down. The disaster exposed a familiar legacy of poor design and corner-cutting. Yet, as far as we know, no one has yet received a lethal dose of radiation.

And that, ladies and gentlemen, is George Monbiot.

It gets better too.

Deep green energy production – decentralised, based on the products of the land – is far more damaging to humanity than nuclear meltdown.

Yup. Fully converted. Nuclear ain\’t great, but as with democracy, it\’s the least bad option out there. And as he points out, as I\’ve been saying since the tsunami actually hit. What Fukushima shows us is how safe nuclear actually is.

BTW, a little birdie has told me that if you\’ve got a decent plan about thorium based plants, you might get a decent reception at 3i. Just a little tip you understand.

Weighing up the Fukushima nuclear thingie

Deaths so far from the nuclear power plant* being hit by the 5 th largest earthquake of the past century and a 30 foot tsunami: 0

Deaths today from the coal industry operating as normal:

52 feared dead in Pakistan coal mine explosion

The nuclear industry is just so unsafe, isn\’t it?

* From the nuclear bit you understand, not from the earthquake or tsunami itself, like that poor crane operator.

Pinetop Perkins RIP

He made appearances in blues clubs alone or in a trio, often sporting a homburg, one foot stomping to the beat – although never on Sundays.

\”I ask the Lord, please forgive me for the stuff I done trying to make a nickel,\” he told the Tribune.

Will Straw n\’this logic stuff

I wouldn\’t use this argument myself:

It’s also worth remembering that a statistically significant result does not mean that there is no fiscal multiplier. Dr Ilzetzki was keen to stress today that the error range was from -1 to +1 so that means there’s as much statistical chance of it being zero as being 1.

To give you the background: I pointed to a new paper that tried to give empirical (rather then theoretical) results for the size of the fiscal multiplier. The results were that that mutliplier is higher in advanced economies, lower in open ones, lower in highly indebted ones (the definition of \”highly indebted\” seeming to be about 3 months of borrowing away from where we are) and statistically the same as zero in countries with a flexible exchange rate regime.

I then said that the £ is flexible therefore the fiscal multiplier in the UK will be, to a level of statistical significance, zero and thus not really all that helpful. Thus, for the UK, into the dustbin of history with Keynesianism.

Yes, of course I was being provocative, no, one paper does not prove such to the nth degree but it\’s not an odd or biased reading of the results of the paper. It\’s a simple logical conclusion from what they said.

A reasonable reaction would be to go away and point to all these other papers, here and there, which give different results for the size of the fiscal multiplier in flexible exchange rate economies. You know, similarly empirical results, calculated from the real world, not the assumptions that people are putting into models from theory. These papers do of course exist, don\’t they?

That isn\’t what our young Will Straw does. Rather, he takes that line given above:

It’s also worth remembering that a statistically significant result does not mean that there is no fiscal multiplier. Dr Ilzetzki was keen to stress today that the error range was from -1 to +1 so that means there’s as much statistical chance of it being zero as being 1.

So, the defence of Keynesian fiscal expansion, of the fiscal multiplier being positive, is actually that there\’s an equal chance that\’s it\’s negative as it is positive. No, don\’t look at whether that statement is true for a moment, just look at what is actually being quoted as a defence.

Spending hundreds of billions of £s has, according to the defence that Will is putting forward, has an equal chance of reducing the size of our economy by hundreds of billions of £s as it does of increasing the size of our economy by hundreds of billions of £s.

Recall, this is his defence! A 50/50 break on doing some good or entirely fucking us over.

Therefore we must do it.

Will certainly knows more about politics than I do, (he\’s been a SpAd you know),  has better contacts in the union movement (his blog is paid for by such) but perhaps a remedial course in logic might be made available to him?

I dimly recall a response of Will\’s to a critique of a Guardian piece of his. A CiF commenter asked what his experience of the real world of business was like, to which the response was that he did run his own business you know. That whole intern and a union cheque that is Left Foot Forward.

Oh well, only another 4 years of this to go and a safe Labour seat will open up for young Mr. Straw. It\’s this social mobility thing that everyone\’s so keen on these days. Sons of former Cabinet Ministers do get to go to Parliament just like they do get to be SpAds. Just as with the Benns, where we\’re on the fourth generation of MPs and the third of Cabinet Ministers.

Social mobility, a selection of the talented wherever they come from, so important, don\’t you think?