Category: Economic issues

Smart meters, and the cost of staying warm


The green bars show my daily electricity usage for January in kilowatt hours. Below: a smart meter.

A year or two ago, my electric company — a regional electric coop named Energy United — installed “smart meters.” The purpose of these meters is to save the power company money, because no one has to be sent around to read them. The meters call home over the electric lines, reporting data back to the power company. Not to mention letting the power company know if your power is out, and automatically tracking widespread outages.

But this calling home doesn’t happen just once a month. It’s a regular thing. This allows the power company to track daily usage of electricity and report it to their customers on their web site.

I’m almost obsessive in collecting data on my electricity usage. I keep records of the abbey’s electrical usage in a spreadsheet, going back to when the lights at the abbey first came on in June 2009. When the weather is exceptionally cold, as it has been at times this month, I like to see how many kilowatt hours it takes to get through a really cold day.

Yesterday, January 25, was such a day. The low was 16F when the day started, and 19F when the day ended. The temperature did not rise above freezing all day, and snow and ice pellets were falling. I used 37 kilowatt hours yesterday. That covered the heat pump’s usage, plus my normal electrical usage. My stove is electric. I baked bread and did a lot of cooking yesterday. I also kept water boiling in a kettle for part of the day to raise the humidity in the house. My electrical cost for the day was $2.82. If I look at kilowatt-hour usage for the lowest-usage day of January (when I used very little heat) and do the arithmetic on the difference, I calculate that my heating cost yesterday was $1.91, while the remaining $0.91 was for other electrical usage.

This blows my mind. Partly it’s that electricity rates are low in North Carolina compared with some other areas, and partly it’s that the abbey is a very efficient building and isn’t too big (1,250 square feet). Plus the heat pump, a Trane unit of the same age as the abbey, is pretty efficient. Heat pumps are by far the most energy-efficient source of heat, though they lose efficiency when the outdoor temperature is low. When the outdoor temperature is, say, 45 degrees, a heat pump is about four times more efficient than when the outdoor temperature is, say, 16 degrees. It is, after all, capturing heat from the outside air and pumping it into the house, so they don’t work as well in cold weather. All heat pumps, as far as I know, having heating coils that kick in if the outdoor compressor can’t produce enough heat. They really are quite amazing machines, and modern heat pumps are much more efficient than the heat pumps of 20 or 30 years ago. Modern heat pumps also use ozone-friendly gases. The old freon systems are getting old and are rapidly being replaced.

These calculations led me to a thought experiment. What if that heat had come from, say, gasoline rather than electricity. If the gasoline had cost $3.69 a gallon, then the $2.82 would have bought me three-quarters of a gallon of gas. The cost of the heating portion of my electricity equals half a gallon of gas. That means that I heated the abbey on the coldest day in January for the amount of energy (calculated according to cost) that it would take to drive an SUV about 8 or 9 miles! How the carbon load compares may tell a different story, but that’s a calculation for another day.

I plan to do a future post on how I’ve used my energy consumption data to roughly calculate my carbon footprint. We all should know what our carbon footprint is.

Note: The abbey has a propane fireplace, and I did use the fireplace some yesterday for the entertainment of myself and the cat. However, the BTU output of the fireplace is much less than the house’s heating system, and the fireplace is never used at night, when the heating system works hardest. Though the fireplace contributed some heat yesterday, the amount of that heat would be minor compared with the heat provided by the electric heat pump system.

So much destruction, so little oil

We’re being bombarded with all kinds of propaganda these days about a so-called renaissance in American oil production, as though they’ve found a way to get around the absolutes of peak oil and keep the stuff flowing for decades more, cheap.

See that little blip on the end of the chart? That’s what we’ve gained from fracking places like North Dakota into mudholes filled with toxic wastes. Can you imagine what we’d have to do to this country to get any meaningful amount of oil from a highly polluting extraction method like fracking?

Competition


No crowded aisles today at Whole Foods

A few weeks ago I mentioned that a new Trader Joe’s has opened less than a mile from Whole Foods. Yesterday, on a Monday morning, Trader Joe’s was busy. But Whole Foods was as un-busy as I’ve ever seen it. It’s interesting that Trader Joe’s seems to siphon off so many customers from Whole Foods, because they’re not the same kind of store.

For one, Trader Joe’s doesn’t carry a lot of stuff. If you read up on the grocery business, you’ll learn that the bigger grocery stores may carry up to 50,000 items. Trader Joe’s carries only about 4,000 items, and 80 percent of them are Trader Joe’s own brand. Trader Joe’s is a nice supplement and cost-reducer for grocery shoppers, but most people are going to have to shop somewhere else as well.

Still, I doubt that Whole Foods is hurting. They have one of the highest pre-tax profit margins in the grocery business, 4.3 percent. The average for the grocery industry as a whole is closer to 1 percent. As for Trader Joe’s profits, very little is known because the company is privately held.

Regulatory capture


Americans pay four times more than the French for Internet and cell phone service

The last time I posted on how Americans are being ripped off on the cost of Internet and cellular service, the U.S. ranked around 11th, as I recall, on Internet speed. Now we’re 29th and still falling. As the article says, this is because of regulatory capture. It’s just one of the ways we all pay for the fact that our Congress has been bought.

If Americans only knew anything about the rest of the world. But they don’t.

50% of us hold only 1% of American wealth


California, 1936

Right-wingers cracked up on right-wing propaganda make much of the fact that almost half (around 46 percent) of Americans pay no federal income tax. It is true. The Wall Street Journal often calls these people the “lucky duckies,” and all right-wingers just know that the lucky duckies are getting a free ride off the rest of us and that it’s the lucky duckies who are eating the lunch of the middle class. What right-wingers don’t know, though, because their propaganda machine doesn’t tell them the rest of the story, is that almost all of those lucky duckies are living at or below the poverty line (defined as an income of $23,350 or less for a family of four including two children). They pay a high proportion of their income in other taxes, but they don’t pay any federal income tax because their income is so low and they have dependents. The highest income for qualifying as one of these lucky duckies is $26,400 for a couple with two children. But many of these people make less than $15,000 a year. The reason that so many Americans pay no federal income tax is that poverty is so widespread — measured as either income or assets.

(By the way, in 2011, 78,000 taxpayers with incomes between $211,000 and $533,000 paid no federal income tax. Worse, 24,000 filers with incomes between $533,000 and $2.2 million paid no federal income tax. And not only that, but 3,000 filers with incomes above $2.2 million paid no federal income tax. What were we saying about lucky duckies? You can be sure that the Wall Street Journal hasn’t reported on these lucky duckies. And it is generally assumed by those who bother to think about it for a second that the reason Mitt Romney won’t release his tax returns is that he paid no federal income tax for one or more years.)

Americans, in their bottomless ignorance and eagerness to be deceived, hold extremely warped notions of just how poor the poor are and how rich the rich are. Middle-class Americans also have a been fooled into believing that they get a much larger piece of the pie than they actually get.

My old colleague Dan Froomkin, in the Huffington Post, reports today on a study by the Congressional Research Service that shows that half of Americans hold 1 percent of the nation’s wealth. The top 1 percent hold 34.5 percent, and the top 10 percent hold 74.5 percent.

A study in 2010 by academics from Harvard University and Duke University surveyed Americans on how Americans think wealth is distributed. On average, Americans thought that the richest 20 percent hold 59 percent of the wealth. The real number is closer to 84 percent. Americans were shown pie charts showing the distribution of wealth in different countries and were asked which country they would prefer to live in. They chose Sweden, where the top 20 percent control only 36 percent of the wealth. Distribution of wealth in the United States actually is similar to Latin American countries such as Nicaragua, Venezuela, and Guyana.

Each year since the late 1970s, the rich have been eating more and more of our lunch. There are two main ways they have done this. First, they have drastically changed taxation, so that the rich pay are now paying taxes at the lowest rate in 80 years, while increasing the tax burden on the middle class. Part of the reason the right-wing propaganda machine goes on and on so loudly about taxes is to obscure those facts. Second, they have been scooping up almost all the gains from increased productivity, as this chart shows:

The most important task of Fox News and the right-wing propaganda machine is to keep Americans ignorant of these basic facts. If you keep ’em angry at the lucky duckies, they won’t notice who actually is eating their lunch.

Another peculiarity of Americans is that they have the oddest tendency to identify with the rich, even when they’re barely getting by, falling farther behind each year, and are utterly dependent on the safety net — such things as Social Security and Medicare. It’s an excellent exercise in propaganda analysis, actually, to try to figure out how this is accomplished. I believe that the two biggest factors are television (including not only the propaganda channels but entertainment channels as well) and the “prosperity gospel” prevalent among evangelicals. This “gospel” teaches people that the poor are to be blamed for their situation, that god wants them to be rich, and that giving money to the church is the first step to prosperity. It also teaches them to love war and to hate anyone who isn’t just like them, but that’s a different rant. My point is that it’s as sorry a theology as has ever been devised, which is saying something, since there are so many sorry theologies out there. But it does pack ’em in on Sundays, because they love to hear that god wants them to be rich and to consume voraciously.

But this is nothing new. John Steinbeck was aware of it:

Note: I am aware (because I always try to diligently check my facts to avoid being corrected in a comment) that some have disputed this Steinbeck quote, but whether Steinbeck said those exact words or not, the observation is a true one.

The income of the top 10 percent


Striking It Richer: Emmanuel Saez

Charts like the one above help make it clear why the right wing hates — and fears, and demonizes — progressive economic policies like those advanced by Franklin Roosevelt during the Great Depression. Those policies left us with plenty of rich people, but the rich could no longer take it all. That, of course, is how the American middle class arose after World War II. By the beginning of the Reagan era, the rich got the upper hand again and started taking it all back.

Emmanuel Saez has newly updated data showing that the top 1 percent captured 93 percent of the income gains in 2010.

And yet, thanks to the right-wing propaganda machine, white working Americans in the red states are kept in a state of deep ignorance and cheer for and vote for their continuing impoverishment and marginalization.

Update: The Huffington Post has a story on this today.

Tax propaganda


Timothy Geithner

Every now and then I read dozens of versions of so-called reporting on stories that are important to the establishment, just to marvel at the shallowness of the reporting and the shocking level of co-ordination among the mainstream “news” outlets. I went through this exercise this morning on stories about President Obama calling for reducing the corporate tax rate from 35 to 28 percent.

It doesn’t matter who you read — the New York Times, any of the smaller newspaper chains with Washington bureaus, or the web sites of cable news channels including Fox — all the stories followed the same formula and included the same establishment quotes. I did not find a single mainstream story that compared Obama’s proposed corporate tax rate to individual tax rates. Some stories mentioned that Obama wants to raise taxes on millionaires and leave tax rates the same for people making under $200,000, but I did not find a single story saying what those rates are.

What all these stories is avoiding is telling readers that the establishment wants higher tax rates for individuals than for corporations. As far as I can tell, Obama wants a tax rate of 30 percent for those making more than a million a year. As for those making less than $200,000, the current tax code for individuals taxes income above $171,551 at 33 percent. No one bothered to report this. Only those of us with memories greater than 18 hours can hold such inconvenient facts in our heads at the same time.

The other thing that all the mainstream tax stories have in common this morning is that they make some sort of lame comparison with Mitt Romney’s tax plan. All the stories say that the U.S. corporate tax rate is the highest in the “developed world” other than Japan. Some of the stories even say that many corporations pay less than the nominal tax rate.

When you analyze all this “reporting” for what it is — propaganda — this is the message that they clearly want us to get: They are setting the stage for lower corporate tax rates, regardless of what happens with the presidential election. And does any reality-based taxpaying American believe that tax loopholes for corporations and the super-rich will be closed, given the corruptness of the Congress and the lobbyists who own Congress?

The other thing that the establishment and the corporate media don’t want Americans to know is that, despite all the hoopla about corporate tax rates in the U.S. being high (which is not true because no corporation pays the nominal rate), the tax on capital gains is absurdly low — 15 percent. In other developed countries, the tax on capital gains ranges from 20 percent to 35 percent and even 50 percent. Most Americans probably don’t understand that it’s the capital gains tax that rich people pay. That’s why Mitt Romney’s tax rate is 13.9 percent. Never in my working life did I pay a tax rate anywhere near that low.

Only the DailyKos shows the usual left-wing concern with reality rather than establishment blather and misdirection:

As has been widely reported for years, the effective (read: actual) corporate tax rate is far lower than the 35 percent headline rate that gets all the bad press. Last year, Citizens for Tax Justice reported on the 280 most profitable Fortune 500 companies. Findings? Thanks to tax breaks and subsidies, the average effective tax rate over the three-year 2008-2010 period was 18.5 percent and the companies enjoyed subsidies of $222.7 billion. During at least one of the three years, 78 highly profitable companies paid zero taxes and 30 actually had a negative tax rate.

But that’s not the worst of it. In 2011, according to the Congressional Budget Office, the effective corporate tax rate fell to 12.1 percent, the lowest level in 40 years. This comes at time when corporate profits are at a 60-year high.

One source reported that Rush Limbaugh says that Obama plan for corporate tax rates would actually raise corporate taxes by closing loopholes, as though that’s bad.

Update: A friend sent this link to a detailed and wonkish piece, published today, on tax policy. I am not in the least surprised that only a socialist organization is willing to do thorough, real-world reporting on tax policy. It’s very important to understand why this is so. Tax policy screws working people while favoring corporations and the rich. That’s only going to get worse, regardless of who wins the next election. The establishment media won’t report in any serious way on tax policy, because they serve the establishment. The right-wing media not only doesn’t report, but also distorts, because it serves the interests of corporations and the super-rich. So the only honest reporting about tax policy comes only from those who are getting screwed by tax policy.

Update 2: My old colleague Dan Froomkin now checks in on corporate taxes. Once again, only the left can be wonkish and thorough. Everyone else must keep on skipping — and help keep the American people the stupidest people in the developed world.

How we got into this mess


James Goldsmith on the Charlie Rose show, Nov. 15, 1994

The devastation to our economies caused by globalization and Wall Street gaming was predictable. It also was predicted. Those of us who, in the 1990s, failed to anticipate where globalization would lead now have an obligation to look back and try to understand why we got it wrong. The video I’m going to link to is a huge help in this process.

It is easy to see why so many people embrace ideology as a way of making sense of the world. The world is extremely complicated and hard to model, so ideology simplifies things and provides some comfort.

Those of us who disdain ideologies and try to understand the world as it actually is take on a huge work load. Not only must we absorb huge amounts of information, we must try to figure out who we can trust and who has disguised motives and seeks to hoodoo us.

In the 1990s, I subscribed to The Economist, which is considered to be ever so authoritative. I fell for The Economist’s predictions about globalization, which was that globalization would lead to increased prosperity for all. The Economist, like the governments of the United States and Europe, was catastrophically wrong. As I began to understand this, I dropped my subscription to The Economist, and I will never trust them again.

So who got it right? Very few people got it right. Among those few was James Goldsmith, a European tycoon and politician who prophesied all this with a book named The Trap. Goldsmith died in 1997.

On YouTube you can find the video of an hour-long interview with Goldsmith by Charlie Rose. Goldsmith predicts it all — the offshoring of jobs and devastating unemployment, the loss of our manufacturing base, the severe neglect of our infrastructure, the flight of hundreds of millions of people in China and other poor countries from farms to the cities, a crisis in agriculture, a massive transfer of wealth from working people to the rich. Goldsmith, we can see in retrospect, was able to make these predictions because he understood and modeled the real world, and he was not thrown off by an ideology. He had principles, though. And one of those principles, despite his great wealth, was that the welfare of the people is far more important than markets and their profits.

We also can learn a lot from this video about how the media and politicians lie to us and mislead us. Charlie Rose was almost combative with Goldsmith and kept interrupting Goldsmith to spout the establishment point of view. Rose also brought on Laura Tyson, then the chair of President Clinton’s Council of Economic Advisers. She also kept interrupting Goldsmith and shouting the establishment point of view.

At the time, I think that I too would have discounted Goldsmith’s ideas, largely because of his record as a tycoon. It is incredibly difficult to identify experts who we can trust. But one thing is very clear: We can’t trust the media, because they speak for the establishment. And if there is anyone in Washington who can be trusted, I’m not aware of it, because corporations own Washington.

This process of checking ourselves and understanding why we were wrong when we are wrong is extremely important. That is one of the major failures of our media and our punditry. They rarely admit their failures or revisit their mistakes. It is up to us to catch their errors when they are dangerously wrong and to simply never pay them any more attention. They have agendas, or they are blinded by an ideology.

Principles, of course, are a good thing, and Enlightenment principles have stood the test of time. But ideologies only guarantee that we will be wrong and that we will neglect or belittle the hard work of trying to understand the world as it is.

We got it wrong about globalization, and now we are paying the price for our wrongness. And those who pushed for globalization (while we were asleep at the switch) are richer and more powerful than ever. As a friend of mine who is a law professor said, “It’s over. We lost.”

Update: From DCS (the law professor), who also has commented on this post, is a link to the entire, unsegmented video, Google video, here. The YouTube link above is in six segments. The YouTube version will play on iPads; the Google video version requires Flash and will not play on iPads.

The real cause of food inflation


Commodities traders at the Chicago Board of Trade

If you asked a few Americans about the causes of food inflation, what answers would you get?

Ask a right-winger, or a so-called libertarian, or anyone else who lives in an ideological fantasy world, and you’ll be told that it’s the government’s fault, that’s it’s all about monetary policy. Totally wrong. Yes, monetary policy is loose, but we are still in a liquidity trap. And besides, real inflation is always accompanied by wage inflation, and wages have barely moved in years and years.

Ask someone who is better informed and you’ll be told that it’s climate change, droughts, floods, crazy weather, increased demand in Asia, the high price of oil, the drain of growing biofuels, and the waste involved in feeding crops to animals to produce meat. Partly right.

The biggest cause, it seems, is — Wall Street. Here are links to two articles that follow the money, publications that Americans don’t read. One is from the German newspaper Der Spiegel. The other is from Foreign Policy.

Speculating with lives: How global investors make money out of hunger

How Goldman Sachs created the food crisis