Saturday, October 16, 2010

Comment on water allocations (in The Australian)

We need to get back to first principles. The amount of water available varies and is often zero for extended periods. So: (A) We need to have agricultural capability out there to take advantage of the water when it comes; and (B) We can't have plants, like fruit trees, that will die if they don't get a minimum allocation every year. So actually rice is a great crop to plant when there's lots of water, as long as it isn't allowed to take water when it is scarce. If you want a market mechanism to do this, I'm happy to give my "Hedging the Weather" talk to anyone who's interested, from the abstract: "Modern radar systems deployed by the Bureau of Meteorology may be able to give an unbiased and reasonably accurate report of how much rain has fallen and where, in areas covered by such radar. This can form the basis of an insurance system to allow farmers and others in those areas to hedge against the weather." This system would give farmers the averaged income they need to keep the regional towns going during droughts.

Monday, October 4, 2010

Need for a 4th arm of government

[response to Andre Joyal at nCategory Cafe]

There isn’t a problem with democracy. The problem is this: The facts are going to influence policy, and that is going to determine who makes money and who doesn’t. This always results in a morass of conflicting claims about the facts. Parliament is not a good place to debate the facts. It is the right place to debate the policy implications of the facts. Democracy needs an independent, vigorous, ongoing, open enquiry into the facts for all matters impacting public policy. That enquiry needs to have the power to acquire evidence, and the financial resources to do its own investigations. The leading investigators need to be seen to have the technical skills to do the job (in particular mathematical skills) plus the right amount of status (like a Judge), independence, and the right personality to stand up to the most powerful people and organizations. Hmm, not easy to find such people. Particularly because it is important that people and organizations who have been associated with promulgating or even condoning statements intended to be misleading need to be excluded from taking up the investigators time, and that process has to also be open. Still it doesn’t sound a lot harder than being an important Judge.

Sunday, October 3, 2010

Comment on Krugman post comparing economic theories

I'd be a lot happier with theories that clearly distinguished between price increases caused by general inflation and price increases caused by the increasing scarcity of some universally used resource input. To rephrase that: if you don't think about money at all, then one expects there to be pain when transitioning a large part of society's infrastructure from one technology to a different one, particularly if it is less efficient. Indeed there have to be a lot of inefficiencies associated with running parallel technologies (like maybe cars and horses in the 30s?). So how do we expect that sort of thing to play out?

Saturday, October 2, 2010

Discussion added to EROEI entry at Azimuth wiki

  • Energy for workers. The janitor’s refrigerator uses energy. Actually all the money paid to all the workers will be spent in ways that cause energy to be consumed. If this is included in EROEI calculation then we can see what happens when there is declining EROEI. The EI can be reduced by reducing wages (in real terms). This can only happen if all wages in the community drop, otherwise the energy business can’t hire. So this is the last resort way of reducing the EI and improving the EROEI.
  • Oil is an energy carrier. In the proposal for a Hydrogen Economy the Hydrogen is just an energy carrier. Similarly oil and its distillates are energy carriers, particularly useful for the transport industry. Recently oil’s price has decoupled from other energy sources (electricity and natural gas). The extra price represents the value of oil as an energy carrier. So it is difficult to use EROEI calculations directly on oil. Ultimately we will still be producing a lot of oil when the EROEI is less than 1, using up non-oil energy in the process.
  • Energy’s reign. It is possible to view the production of goods and services as requiring energy and (skill-weighted) workers. When we spend money, then the services we get use up energy and worker time. The recipients of the money spend it and use up more energy and worker time. Ultimately the money’s circulation uses up some of both. The two have to come into balance. The industrial revolution meant that energy was plentiful and skilled workers were scarce. So energy prices were driven to the floor and wages rose creating the middle class. If energy is in short supply then energy prices will get off the floor and wages will be driven down to restore balance. All of which amounts to an argument that cost/price is the best measure of total energy in or out at any point in time. EROEI calculations that exclude pay and dividends are the way to look at the crucial limit case.