Trickle-down theory once again proven wrong

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living sounds said:
Not as hard as physics, and much more susceptible to special interest driven manipulation. However, it is pretty clear by now that suppy-side economics were and are a scam, a transparent atempt by the wealthy to roll back the New Deal policies that build the middle class and kept them at a reasonable level.
This doesn't make any sense to me at all. Supply-side economics and New Deal policies aren't addressing the same topics. They're not mutually exclusive. Can you explain which New Deal policies are rolled back by supply side economics and how? Or honestly which New Deal policies built the middle class???  :eek:

It's not only the public but also economists. The problem with the next recession is that the usual instrumentarium governments had (lowering rates) isn't at their disposal, at least here in Europe. We're not in a normal situation at the end of a growth cycle. For the Eurozone the sky could actually fall, with the printing press being the only remaining option and as a result massive inflation and a collossal depression. Banks cannot survive on negative interest rates forever, the fear ist that they eventuelly move into the red, start to burn equity and enter a viscious cycle that ends with bankcruptcy. The only way to save them then will be to print lot's and lot's of money...
Yeah, because the business cycle of creative destruction that is inherent to a market was never allowed to happen. Bad investments, fostered by the mismatch between the theoretical ideal and actual interest rates were never corrected. If anything they were exacerbated.  A contraction is just the market's way of telling you that you made too much of something. When it becomes macro-level with an economy, it's saying you made too much of a lot of somethings. We took that signal and instead of allowing the correction to happen, we injected more liquidity than was demanded, and doubled down by making even more somethings. Now we're at the point where we're effectively paying people to borrow money to make even-even more somethings. Gotta pay the piper someday, some way. You either write down the value of the excess, or grow into it, or find a use for it, or something.
 
To me, 'trickle down' is the common term for the Laffer Curve, which is this idea that there exists some taxation rate at which revenue is maximized.  Laffer postulated that the post-WW2 taxation rates were too high, and that lowering the aggregate rate would actually increase revenue.

This has been pretty well debunked, as most calculations seem to indicate that the optimum point, should such a point exist, is actually well north of present taxation rates.  Reagans lowering of the top rates caused a sharp decline in revenues, which was predicted as above.  The deficit had tripled by 1990.  I'm guessing we'll see something similar with the Trump tax cuts:  increases in the deficit, and companies utilizing the lower capital gains rates to implement dividends and buy back stocks.
 
Matador said:
To me, 'trickle down' is the common term for the Laffer Curve, which is this idea that there exists some taxation rate at which revenue is maximized.  Laffer postulated that the post-WW2 taxation rates were too high, and that lowering the aggregate rate would actually increase revenue.

This has been pretty well debunked, as most calculations seem to indicate that the optimum point, should such a point exist, is actually well north of present taxation rates.  Reagans lowering of the top rates caused a sharp decline in revenues, which was predicted as above.  The deficit had tripled by 1990.  I'm guessing we'll see something similar with the Trump tax cuts:  increases in the deficit, and companies utilizing the lower capital gains rates to implement dividends and buy back stocks.

Yes I’m aware. But deficit is only have related. You have to consider tax receipts, not deficit. You could quadruple spending and double tax receipts and the deficit increases. And I still don’t see what it has to do with New Deal era policies.
 
dogears said:
Yes I’m aware. But deficit is only have related. You have to consider tax receipts, not deficit.
Yes I'm aware.  But given I covered tax revenues quite explicitly...I'm not sure what you are clarifying here.
 
Matador said:
Yes I'm aware.  But given I covered tax revenues quite explicitly...I'm not sure what you are clarifying here.
I'm clarifying that mentioning the deficit at all is a complete red herring. You could have the biggest tax receipts in the history of the country simultaneously with the largest deficit, or the lowest tax receipts with the smallest deficit. They are not dependent. Spending is not controlled by income.

I don't think you are correct about tax receipts.

FY 1990 - $1.03 trillion.
FY 1989 - $991 billion.
FY 1988 - $909 billion.
FY 1987 - $854 billion.
FY 1986 - $769 billion.
FY 1985 - $734 billion.
FY 1984 - $666 billion.
FY 1983 - $601 billion.
FY 1982 - $618 billion.
FY 1981 - $599 billion.
FY 1980 - $517 billion.
https://www.thebalance.com/current-u-s-federal-government-tax-revenue-3305762

What say you?
 
dogears said:
Supply-side economics and New Deal policies aren't addressing the same topics. They're not mutually exclusive.

These are placeholders for demand-side economics (variants of Keynsianism, highly regulated, emphasizing redistribution as a feedback mechanism, aka the postwar liberal consensus) vs. supply-side neoliberal economics (emphasizing deregulation, shareholder value, the "invisible hand", growth-by-tax-cuts).
 
dogears said:
I don't think you are correct about tax receipts.

What say you?
Revenues declined, because what else could they do?  Everything else being equal, if you take a pay cut at work, you'll suffer the opportunity cost of those reduced wages, even if you manage to increase the amount in your savings account.

But you don't have to believe me:  the Office of Tax Analysis calculated the effect in inflation adjusted dollars in 2013, and showed a net decline of -9% in revenues averaged over a 2 year period, and -14% over a 4 year period immediately after enactment of the Economic Recovery Tax Act of 1981, which dropped the top rate from 70% down to 50%.

Analysis of the CBO matches this conclusion as well, and shows a 29% reduction in expected revenue immediately following the 1981 tax cut - it was so dire that lawmakers had to scramble in the following years to rapidly reinstate tax levels to many of the cuts outlined in 1981.

The entire thesis of trickle-down has been repeatedly disproven, both in technical analysis, as well as practical implementation, because a) it's based on a flawed understanding of elasticity of taxation, and b) its presumes GDP growth rates which exceed the tax receipts reductions by 5 or 6 orders of magnitude, which has never happened.  However when you consider that reduced taxation is a boon to the top 1%, who fund a significant percentage of the campaigns for government, then the policy makes perfect sense.
 
living sounds said:
These are placeholders for demand-side economics (variants of Keynsianism, highly regulated, emphasizing redistribution as a feedback mechanism, aka the postwar liberal consensus) vs. supply-side neoliberal economics (emphasizing deregulation, shareholder value, the "invisible hand", growth-by-tax-cuts).
This is just word salad most of the things you're talking about are not demand-side or supply side.

Regulation and supply-side/demand-side economics aren't the same thing at all and one doesn't preclude the other.

Shareholder value is certainly not a feature of one vs the other... its just a basic part of capitalism. And "The invisible hand" was coined by Adam Smith in 1759.  :eek: :eek: :eek:
 
Matador said:
Revenues declined, because what else could they do?  Everything else being equal, if you take a pay cut at work, you'll suffer the opportunity cost of those reduced wages, even if you manage to increase the amount in your savings account.
Of course.

But you don't have to believe me:  the Office of Tax Analysis calculated the effect in inflation adjusted dollars in 2013, and showed a net decline of -9% in revenues averaged over a 2 year period, and -14% over a 4 year period immediately after enactment of the Economic Recovery Tax Act of 1981, which dropped the top rate from 70% down to 50%.

Analysis of the CBO matches this conclusion as well, and shows a 29% reduction in expected revenue immediately following the 1981 tax cut - it was so dire that lawmakers had to scramble in the following years to rapidly reinstate tax levels to many of the cuts outlined in 1981.
Ya clearly they went down and back up - I posted the tax receipt numbers. But you said it was about 1990, and the only year which showed a decrease in tax receipts was 1982 to 1983.

So I think some clarity is in order. I think there's a bit of a problem with what exactly we're talking about. For one, the 1982 bill didn't directly "undo" 1981 - the marginal and personal tax rates that were rescinded hadn't gone into effect yet. It added taxes, changed loopholes, added taxes on mergers, etc etc.

It is an interesting question though, and one I frankly don't know enough about. If we think of this as a laboratory experiment, what is our control, what is our variable? What are we measuring?

If we reduce personal top marginal rates, but raise taxes elsewhere to offset on a static basis and tax receipts go up, did we learn anything? I'm not sure.


The entire thesis of trickle-down has been repeatedly disproven, both in technical analysis, as well as practical implementation, because a) it's based on a flawed understanding of elasticity of taxation, and b) its presumes GDP growth rates which exceed the tax receipts reductions by 5 or 6 orders of magnitude, which has never happened.  However when you consider that reduced taxation is a boon to the top 1%, who fund a significant percentage of the campaigns for government, then the policy makes perfect sense.
I think the first part may be true. As I said, I don't know enough to have a coherent argument about it. Other than that I don't think there's really been an practical implementation, because to isolate it would be practically impossible (I think). But I'm not an economist.

Reduced taxation is a boon for everyone who pays taxes, so I'm not sure why the 1% are strictly relevant. If you say preferential tax incentives specifically for them, then I suppose you'd have a point. But I don't think the 1% are getting most of their income in a form subject to income tax rates.
 
I believe I said 'deficit had tripled by 1990', not revenues declined in 1990.

I will agree causation is a pain, especially in complex systems like the climate and large-scale economies.  However trickle-down is sold under the brand name of "Lower taxes and everyone will prosper", which hasn't been proven to be the case in any measurable sense since it was attempted back in the 1980's.  In fact, there is a strong correlation between government investment in infrastructure / public works and long term economic benefits.  One need only look to the New Deal and the post WW2 expansion to see evidence of this, even during periods of relatively 'high taxation'.

To return to the New Deal, one might consider this to be the economic version of quantum supersymmetry, which is exactly opposite in sign and magnitude from trickle-down.  This would theorize that an expansion in public works, spending, and taxes, might have the effect of boosting the low-term economic growth of the country, just as it did in the 1930's and 1950's.  I still find it strange that people still cling to "less taxes = growth", despite it never having being proven to work long term, and immediately dismiss "more taxes = growth", despite three decades where it was highly correlated with long-term growth.

One could imagine a theoretical multi-trillion dollar investment in energy infrastructure, to eliminate (or greatly reduce) our dependence on foreign entities for energy demands:  what a transformative effect it could have on the populace, from reduced energy costs, changes in foreign policy, reduced support for bad actors in the Middle East, and potentially a large impact on damage to the environment (if done properly).
 
dogears said:
Reduced taxation is a boon for everyone who pays taxes, so I'm not sure why the 1% are strictly relevant. If you say preferential tax incentives specifically for them, then I suppose you'd have a point.

Progressive taxation means that someone in the middle or lower classes on average receives a net transfer in services the governement provides. The 1% can afford not to rely on most of these services, while the rest cannot.

dogears said:
But I don't think the 1% are getting most of their income in a form subject to income tax rates.

That's why lowering capital gains taxes and estate taxes has always been at the forefront of the super-rich's agenda.


Of course, a lot of political measures other than taxation have been instrumental in changing the dynamics, like the attack on collective bargaining from the right since the 80s. It is all part of the swing from the liberal consensus to the age of neoliberalism. A swing back to the left may be immanent now.
 
In an effort to learn I searched for critiques and defenses of supply side economics. I came across this article, which references this article, learned a lot, figured I'd share.

It's about international trade, exchange rates, and inflation, and how they're all linked. Interestingly enough, the article describes that tax cuts for a depressed economy inject money into the economy - which is actually a Keynesian stimulus.

And, I also learned that the Mundell-Laffer view is not that the tax cuts pay for themselves in revenue by growth, but to cover the interest payments on the debt incurred on the deficits caused by tax cuts. Then, the economy grows out of the debt.  "Even if a bigger deficit emerges, sufficient tax revenues will be recovered to pay the interest on the government bonds issued to finance the deficit. Thus, future taxes would not have to be raised and there would be no subtraction from future output. Tax cuts, therefore, actually can provide a means for servicing the public debt." This isn't anti-Keynes, it's just a way to pay for Keynesian stimulus!

The key point to their theory is being able to reduce inflation by tight monetary policy without causing a recession, not strictly one of growth through reduction in taxes. I other words, its a cure for stagflation. I think supply-side economics needs a better PR firm...

One thing I found particularly interesting is a comment about Laffer's position on balance of trade. That when a country grows faster than the rest of the world it has a worse balance of trade - and as long as the government does not increase money creation, the exporting of bonds pays for this trade deficit. This isn't novel thinking at all these days, but the article presents it as if it were in the 1970s. I wish President Trump understood this, because he looks at balance of trade as  in the "old" way criticized by Mundell. Mundell says "Most of Great Britain's economic problems over the last 30 years have come about because of London's fetish with the trade account. It is forever trying to increase exports and decrease imports, and in the process of trying to send more goods out and allow fewer in has systematically reduced the efficiency of its economy."
 
Matador said:
I believe I said 'deficit had tripled by 1990', not revenues declined in 1990.

I will agree causation is a pain, especially in complex systems like the climate and large-scale economies.  However trickle-down is sold under the brand name of "Lower taxes and everyone will prosper", which hasn't been proven to be the case in any measurable sense since it was attempted back in the 1980's.  In fact, there is a strong correlation between government investment in infrastructure / public works and long term economic benefits.  One need only look to the New Deal and the post WW2 expansion to see evidence of this, even during periods of relatively 'high taxation'.

To return to the New Deal, one might consider this to be the economic version of quantum supersymmetry, which is exactly opposite in sign and magnitude from trickle-down.  This would theorize that an expansion in public works, spending, and taxes, might have the effect of boosting the low-term economic growth of the country, just as it did in the 1930's and 1950's.  I still find it strange that people still cling to "less taxes = growth", despite it never having being proven to work long term, and immediately dismiss "more taxes = growth", despite three decades where it was highly correlated with long-term growth.
I can't agree with the causation of growth in a post-WWII era being because of high taxes. There are so many confounding effects there, not the least of which being the only major world economy not decimated by the war.  I think we can easily imagine that there is an optimum amount of infrastructure and public spending, and that it is somewhere north of 0% and somewhere south of 100%. Likewise taxation.

The fact of the matter is, the New Deal policies were not successful at pulling the US out of the depression. Whatever we may think of them politically, the GDP growth numbers are objective.
While the economy had somewhat recovered, it was far too weak for the New Deal policies to be unequivocally deemed successful. In 1933, at the low point of the contraction, GDP was 39% below the trend before the stock market crash of 1929, and by 1939, it was still 27% below that trend. Likewise, the number of private hours worked was 27% below trend in 1933 and was still 21% below the trend in 1939. Indeed, the unemployment rate in 1939 was still at 19% and would remain above pre-Depression levels until 1943.
https://www.investopedia.com/articles/investing/011116/economic-effects-new-deal.asp

I think here we simply have a fundamental disagreement. Capitalism, the wisdom of crowds and markets, is demonstrably superior to command economies. Whats more, on an ethical or philosophical level, people should be free to spend their own money as they see fit; every dollar spent by the public corporately is one dollar less spent by individuals in aggregate individual capacity. Just on principle, I think that the combination of the moral hazard and the known efficiencies of markets strongly outweigh any perceived advantages of increased central planning.  Where to draw the line is always the question, though.

One could imagine a theoretical multi-trillion dollar investment in energy infrastructure, to eliminate (or greatly reduce) our dependence on foreign entities for energy demands:  what a transformative effect it could have on the populace, from reduced energy costs, changes in foreign policy, reduced support for bad actors in the Middle East, and potentially a large impact on damage to the environment (if done properly).
So, I do business strategy for a living for a multinational company -- this is an area I can speak coherently and with some fair amount of confidence on. What you're advocating for is absolutely, positively, without a doubt inefficient...and based on some bad presuppositions.

For starters, we are more or less independent from foreign entities for energy demands. The shale gas revolution has made cheap natural gas a guarantee for the foreseeable future. The US has the capacity to build as many nuclear plants as we like. We do not need the USG to inefficiently (by comparison to the market) central-plan monetary spend to foster energy independence. Even a clean one.

Subsidies into the power market are absolutely wrecking the industry. Renewables are not "firm" - you can't dispatch them and they're inverter based - and come with an increased transmission cost due to the need to have dispatchable firming, backup power, conditioning, and the simple need to move the power from where the wind or sun is to where it is needed. What's more, they're unnecessary.  Wind and solar prices have been decreasing - solar at exponential rates - for decades. The market isn't stupid; when the levelized cost of electricity for renewables is lower than traditional generation, the market absolutely will switch over. We know because this is happening. Subsidies only make this entire picture unclear, and at some point they can even hinder adoption because of the unknown duration of the subsidy creating a difficulty to forecast and therefore finance the viability of these large capital projects. Even further, because of the secondary and tertiary costs associated with a heavy renewables mix, forcing adoption ahead of viability can have some severe unintended consequences - grid instability, actual increased electricity prices, insufficient backups driven off the grid, and so on.

Tell your friends: renewables will continue to grow. Solar is legit. The future is bright! We'll still need thermal or nuclear power for the foreseeable future because of the need for terawatt hour level storage for seasonal demands, but 100 megawatt hour level storage is a reality today. This is awesome and really cool.

We don't need the USG to tax us and then give the money back as infrastructure spending for this to happen. It will happen because the technology will eventually simply be superior. Just like we transitioned from horses to cars, or motorola razrs to iphones -- or, in direct comparison, from coal fired power to gas turbine generators. The market will use the best technology available, and that's really great.
 
Matador said:
One could imagine a theoretical multi-trillion dollar investment in energy infrastructure, to eliminate (or greatly reduce) our dependence on foreign entities for energy demands: 
Indeed we need more gas and oil pipeline infrastructure to move product out of several high production areas (or the Keystone pipeline to connect Canada oil exports to Cushing). More gas pipelines would reduce greenhouse emissions that in some fields are too expensive to capture and ship, so they just flare it off. Gas pipelines would actually be "green" and reduce greenhouse emissions.  8)

Relaxing the constraints on fracking industry has already changed the calculus for US energy independence. The world price of oil barely bumped when Iran seized/harassed  oil tankers in the straits of Hormuz, and even after the Saudi oil processing plant was attacked with missiles (by Houthis rebels.. cough). Decades ago, even years ago, this would have had a huge price impact in oil markets (and this is with Venezuela and Iran oil exports sanctioned, that would release even more supply if/when they clean up their act).


what a transformative effect it could have on the populace, from reduced energy costs, changes in foreign policy, reduced support for bad actors in the Middle East, and potentially a large impact on damage to the environment (if done properly).

Instead the green new deal promises much higher energy costs that will burden poor people the most.

Why is nuclear power dismissed as a carbon free energy source?

Me and my fellow utility ratepayers will be paying off our massively expensive (cost overrun) white elephant "clean coal" power plant, that is now burning natural gas because it is notably cheaper than even local coal that it was built to exploit.

The government is not as smart as they think they are. Who remembers Solyndra? That left taxpayers with a $500+M government backed loan guarantee when they went bankrupt. We can debate whether that was fraud or ignorance, maybe both. 

JR

PS: I love it when you guys argue with each other (instead of me) but when it comes to the dismal science "economics" even the famous economists can't agree with each other.  :eek:
 
dogears said:
Interestingly enough, the article describes that tax cuts for a depressed economy inject money into the economy - which is actually a Keynesian stimulus.

Yes, but only if the tax cut affects those who will actually spend it in the economy, which is mainly the lower and middle class.

If you look at the history of tax cuts advocated for by the right and put into effect since the early 80s, it was always largely about reducing the tax burden on the richest part of the population. And many of the tax cuts don't have much relevance in terms of a stimulus to the economy, like the estate and capital gains taxes. Much of that money went to tax havens.

As for the Laffer-curve and supply-side-economics in general - it just isn't supported by evidence.

See this chart for example:

440px-Top_tax_rates_and_average_growth_1975-2008_v3.jpg


The positive correlation just isn't there.

On the contrary, historically higher top marginal tax rates show a slight positive correlation with GDP:

440px-US_GDP_Growth_vs_Personal_Income_Tax_Rate.svg.png



 
What is “upper income tax rate”? Highest marginal tax rate? That’s a correlation of nothing with nothing unless you weight it by the amount of dollars at the top rate. 

What if the highest marginal rate is 99% but set at 1 trillion? Rate by itself doesn’t mean anything. By that chart we should actually go to 100% upper tax rate for a guaranteed GDP growth of 5%. Do you think that’s a good idea?

A more useful comparison would be to see a GDP growth vs income tax revenues as percentage of GDP - in different countries.

Anyway. It seems like you’re really saying - tax cuts for the rich don’t work. But your argument changes every second as to what work means. Deficit, tax receipts, GDP growth, New Deal policies.... I can’t keep up with all the goalpost moving.
 
dogears said:
I can't agree with the causation of growth in a post-WWII era being because of high taxes. There are so many confounding effects there, not the least of which being the only major world economy not decimated by the war.  I think we can easily imagine that there is an optimum amount of infrastructure and public spending, and that it is somewhere north of 0% and somewhere south of 100%. Likewise taxation.

The fact of the matter is, the New Deal policies were not successful at pulling the US out of the depression. Whatever we may think of them politically, the GDP growth numbers are objective. https://www.investopedia.com/articles/investing/011116/economic-effects-new-deal.asp
There will always be disagreement among economist... as the old joke goes to get three opinions about an economic theory ask two economists.  ;D

To the question, do not confuse correlation with causation, even back then there were interrelated world trade events, and failed experiments (Like Smoot-Hawley tariffs)
I think here we simply have a fundamental disagreement. Capitalism, the wisdom of crowds and markets, is demonstrably superior to command economies. Whats more, on an ethical or philosophical level, people should be free to spend their own money as they see fit; every dollar spent by the public corporately is one dollar less spent by individuals in aggregate individual capacity. Just on principle, I think that the combination of the moral hazard and the known efficiencies of markets strongly outweigh any perceived advantages of increased central planning.  Where to draw the line is always the question, though.
+1
So, I do business strategy for a living for a multinational company -- this is an area I can speak coherently and with some fair amount of confidence on. What you're advocating for is absolutely, positively, without a doubt inefficient...and based on some bad presuppositions.
we get a wide range of opinions around here. All deserve air and sunlight, and challenge (even mine).  8)
For starters, we are more or less independent from foreign entities for energy demands. The shale gas revolution has made cheap natural gas a guarantee for the foreseeable future.
I expect the NG fields to deplete faster than oil but we were supposed to be well into/past "peak oil" by now, and they keep finding more fossil fuel under every rock/shale formation.
The US has the capacity to build as many nuclear plants as we like. We do not need the USG to inefficiently (by comparison to the market) central-plan monetary spend to foster energy independence. Even a clean one.
The nuclear power generation industry is saddled with extremely negative public perception no doubt related to high profile accidents involving rather old technology, with a bit of mismanagement thrown in to make those accidents worse. We are not exploiting the latest and safest nuclear technology ever. That plus the nuclear power generation manufacturer's inability to bring in a new plant on time and under budget. I have not completely figured out why but I suspect heavy handed government regulation is in the mix.

Government regulation is absolutely necessary for safe nuclear power generation but they need to be part of the solution, not the problem. When my local utility built a "clean coal" plant (arguably before the technology was ready) they had to deal with shifting regulatory thresholds, and for some reason being the gang that can't shoot straight. Maybe it's just mismanagement common to large utilities that routinely pass cost overruns along to rate payers. Besides my clean coal plant that suffered (we ratepayers suffered) huge cost over runs, that same utility parent company has two nuclear projects in different states with similar reported problems, not sure both will ever be finished and operational.
Subsidies into the power market are absolutely wrecking the industry. Renewables are not "firm" - you can't dispatch them and they're inverter based - and come with an increased transmission cost due to the need to have dispatchable firming, backup power, conditioning, and the simple need to move the power from where the wind or sun is to where it is needed. What's more, they're unnecessary.  Wind and solar prices have been decreasing - solar at exponential rates - for decades. The market isn't stupid; when the levelized cost of electricity for renewables is lower than traditional generation, the market absolutely will switch over. We know because this is happening. Subsidies only make this entire picture unclear, and at some point they can even hinder adoption because of the unknown duration of the subsidy creating a difficulty to forecast and therefore finance the viability of these large capital projects. Even further, because of the secondary and tertiary costs associated with a heavy renewables mix, forcing adoption ahead of viability can have some severe unintended consequences - grid instability, actual increased electricity prices, insufficient backups driven off the grid, and so on.
All good points. My older brother, whose expertise is in land based turbines for power generation has worked in that industry for decades.  According to him NG is the hot energy source these days (my clean coal power plant is burning NG right now).  I have joked that somebody needs to invent a way to send electricity over the internet...
Tell your friends: renewables will continue to grow. Solar is legit. The future is bright!
I have been paying close attention to this for decades and watched the painfully slow improvements in solar efficiency (almost as slow as battery technology improvements). Made even more frustrating by the constant projections about what is right around the corner. Electric cars are 100 years old. If they really made sense we'd already have them in every garage. I expect we will eventually reach much higher efficiency with safe compact batteries to store energy off peak inexpensively, but probably not in my lifetime. Electric cars could lose the heavy and expensive battery packs if they could grab energy from the roads... this would be a significant infrastructure investment but might make sense in and around dense cities.
We'll still need thermal or nuclear power for the foreseeable future because of the need for terawatt hour level storage for seasonal demands, but 100 megawatt hour level storage is a reality today. This is awesome and really cool.
+1.. we need to build nuclear power plants right now, even though I expect nuclear power to be obsolete by the end of this century. We will consume a lot of watts between now and then, and cheap energy will help everybody, especially the poor.
We don't need the USG to tax us and then give the money back as infrastructure spending for this to happen. It will happen because the technology will eventually simply be superior. Just like we transitioned from horses to cars, or motorola razrs to iphones -- or, in direct comparison, from coal fired power to gas turbine generators. The market will use the best technology available, and that's really great.
Yes... The government likes to think they are smarter than the public. Voters who think the government is smarter than them, may be correct but only about themselves.  ::)

I remain optimistic about a better future, and the technology we already enjoy right now is pretty remarkable if we take a step back and hold it in proper perspective.  The best thing the government can do is get out of our way. Imagining some existential crisis for the government to fix is an old political trick to gain power over gullible people. 

JR
 
I expect the NG fields to deplete faster than oil but we were supposed to be well into/past "peak oil" by now, and they keep finding more fossil fuel under every rock/shale formation.
The US has gas reserves to last a century the way things stand today, but we've seen technological advances that have done silly things like double the recoverable amounts. I'm pretty sure I will be long-dead before we run out of NG. In the nearer term, there was a really nice steady base formed by the OPEC cuts that made the US drilling and producing industry extremely lean and mean. During that time one of my customers (Chevron) was continuing to drill wells, and shut them in. We have a LOT of supply on the sidelines.

The problem with nuclear is both real and imposed. The regulatory burden is significant, like you said. But also, nuclear power plants are very expensive in total cost. When you have an unclear picture of how stable electricity prices are going to be - particularly base load prices (because this is where renewables pressure the market first) it becomes extremely difficult to make a case for financing a nuclear plant...or even continuing to operate one. We have some true market challenges in power, because the way we price power right now makes it difficult to truly price in the time value of money for capital projects.

All good points. My older brother, whose expertise is in land based turbines for power generation has worked in that industry for decades.  According to him NG is the hot energy source these days (my clean coal power plant is burning NG right now).  I have joked that somebody needs to invent a way to send electricity over the internet...
I work on heavy industrial turbines myself. Maybe I know your brother. It's not a huge industry. ;)

I have been paying close attention to this for decades and watched the painfully slow improvements in solar efficiency (almost as slow as battery technology improvements). Made even more frustrating by the constant projections about what is right around the corner. Electric cars are 100 years old. If they really made sense we'd already have them in every garage. I expect we will eventually reach much higher efficiency with safe compact batteries to store energy off peak inexpensively, but probably not in my lifetime. Electric cars could lose the heavy and expensive battery packs if they could grab energy from the roads... this would be a significant infrastructure investment but might make sense in and around dense cities.
Exponential growth is hard for humans to handle. We think linearly.

Solar cost has been decaying exponentially with regard to install base since the 70s. See: Swanson's law. Right now, today, solar and wind with storage is competitive with coal in some markets.

This is different than electric cars, because there's no use-advantage. What I mean is, there is more value to being able to drive 350 miles on a tank/charge than 1 mile 350 times. Power isn't like that, it's totally fungible. If you can put a megawatt on the grid, you can sell it.  The only challenge today is matching the offset between demand and supply with renewables, both short term (each day) and long term (summer-winter etc).

But, even without large-scale seasonal storage, renewables are valid without subsidies. This is why large gas turbine OEMs are struggling...large turbine sales have gone from around 400 per year to 100 globally, and that's with historically low gas supplies and LNG distribution capacity ramping up around the globe.  The market has simply changed, because exponential decay is real.

If you look at the big picture, there are some incredible convergences of seemingly unrelated technologies at play here. For example, being able to utilize the distributed network of EV batteries as grid conditioning, distributed power, renewable firming, and a large renewable oversupply during the day converges advances in renewables, blockchain technology for tracking transactions, digitization for actually being able to monitor and perform the transactions feasibly, and battery technology. It's phenomenal.
 
dogears said:
The US has gas reserves to last a century the way things stand today, but we've seen technological advances that have done silly things like double the recoverable amounts. I'm pretty sure I will be long-dead before we run out of NG. In the nearer term, there was a really nice steady base formed by the OPEC cuts that made the US drilling and producing industry extremely lean and mean. During that time one of my customers (Chevron) was continuing to drill wells, and shut them in. We have a LOT of supply on the sidelines.
Another unintended consequence of too easy money for too long. The price of oil seems to be ignoring intentionally provocative events in the ME, because of all this marginal capacity. I remember when OPEC tried to drive the frackers out of business with low oil prices... How did that work out? They got lean and mean. I am not a fan of more regulation, but still uncomfortable about flaring off gas, because it is uneconomic to transport. 
The problem with nuclear is both real and imposed. The regulatory burden is significant, like you said. But also, nuclear power plants are very expensive in total cost. When you have an unclear picture of how stable electricity prices are going to be - particularly base load prices (because this is where renewables pressure the market first) it becomes extremely difficult to make a case for financing a nuclear plant...or even continuing to operate one. We have some true market challenges in power, because the way we price power right now makes it difficult to truly price in the time value of money for capital projects.
I work on heavy industrial turbines myself. Maybe I know your brother. It's not a huge industry. ;)
Richard (Dick) Roberts... one of the smartest people I know...except that he lives in CA, because his wife has a good gig there. If you do know him be nice, (you can dish dirt using PM. )
Exponential growth is hard for humans to handle. We think linearly.
humans think?  ::)
Solar cost has been decaying exponentially with regard to install base since the 70s. See: Swanson's law. Right now, today, solar and wind with storage is competitive with coal in some markets.
and coal is not competitive with NG already so perhaps a century worth of energy from coal will remain buried. My local utility is living proof that clean coal is a pipe dream.  :eek:
This is different than electric cars, because there's no use-advantage. What I mean is, there is more value to being able to drive 350 miles on a tank/charge than 1 mile 350 times. Power isn't like that, it's totally fungible. If you can put a megawatt on the grid, you can sell it.  The only challenge today is matching the offset between demand and supply with renewables, both short term (each day) and long term (summer-winter etc).
Funny story about range... a couple years ago for chuckles I looked at buying an old used EV... My once a week shopping trip is roughly 15 miles round trip.. easily within the range of an old EV with tired battery... I found several, but none within driving distance of my house.  ::) ::)

email electricity.. then we can send it from the day side to the night side of the world.  ;D
But, even without large-scale seasonal storage, renewables are valid without subsidies. This is why large gas turbine OEMs are struggling...large turbine sales have gone from around 400 per year to 100 globally, and that's with historically low gas supplies and LNG distribution capacity ramping up around the globe.  The market has simply changed, because exponential decay is real.
the history of fossil fuels involves a near continuous (non-linear?) reduction in extraction cost.
If you look at the big picture, there are some incredible convergences of seemingly unrelated technologies at play here. For example, being able to utilize the distributed network of EV batteries as grid conditioning, distributed power, renewable firming, and a large renewable oversupply during the day converges advances in renewables, blockchain technology for tracking transactions, digitization for actually being able to monitor and perform the transactions feasibly, and battery technology. It's phenomenal.
I don't see many (any?) teslas drive past my house but my brother is already on his second(?) one so his wife can use the carpool lane out in lala land. 

In the near term I see low hanging fruit from things like improved house insulation to reduce heating/cooling losses. 

I still see a place for next gen nuclear as a bridge technology between now and when solar gets there (but I do not work in the industry so defer to your judgement). The governments seem to have already decided to skip ahead over nuclear. Germany even decommissioned their nuclear plants (after Fukushima) without doing all the math about when the sun don't shine and wind don't blow. The vast majority of small countries pursuing nuclear power are fooling nobody about their blatant intentions to join the nuclear weapons club.  That might be the single best reason to skip over nuclear.  8)

I appreciate your apparent expertise in this area... If I was king I'd make everybody paint their roof white in the summer, and black in the winter.. If Musk was king they'd all have solar roof shingles (not a joke, but a little funny).

JR
 

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