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Crossposted at The Seminal at FDL.

A Siegel has a good piece up describing John Doerr's suggestion to use federal dollars to pay individual homeowners and big box retailers (like Lowe's and Home Depot) to spend money on supplies and construction workers to retrofit houses to make them more energy efficient.

I am going to argue that's not a very efficient use of public resources. Or to say that differently, we should spend the money on something else.

When we have disagreements about a particular course of action, it is usually because we either disagree on the end result, or we disagree on how to get there. This simple model helps us examine where we have room for compromise, and where we have to resort to more fundamental, majority rules decision-making.

One way to approach this perspective is through the framework of opportunity costs. The relevant question is not the absolute value of a particular course of action, but instead, the relative value of a particular course of action compared with possible alternatives. For example, society could choose to give me $1 billion. That would improve the economy; I would go spend some, which would have multiplier effects, and I would invest some, which would have multiplier effects. If the question was, 'should we give this diarist a billion dollars and instruct him to stimulate the economy?', the answer might actually be yes if we did not consider the opportunity costs of that money. As a non-random commentator, I would heartily endorse such a proposal, extolling the virtues of my ability to create jobs while adding value to the community. I would suggest I could do this much better than some other unidentified citizen.

But ultimately, on balance, that would not be a good policy**, because it conflicts with two core premises most Americans share about economics, the allocation of scarce resources in society:

  1. All other things being equal, private parties know best how to allocate their resources
  1. Government expenses should go toward things that benefit the public commons, not enrich private property owners (ie, the preamble to the Constitution - common defense, general welfare, etc)

I agree heartily with Doerr, A Siegal, and others on a great many end goals. But I do not think this particular approach is a good use of the money. It effectively is a transfer of wealth from taxpayers to homeowners, and not just any homeowners, but those who have been the most irresponsible in addressing improvement needs on their property. If we do not trust property owners to make competent decisions about their property, then I would suggest the problem is the concept of private property itself. Perhaps people are just too emotional, or too short-sighted, to handle treating their home as both an asset and shelter. Perhaps government should just directly control the housing stock. (And if the obstacle is that property owners don't have money to improve their property, that's a wage problem, not a weatherization problem.)

Personally, I do not believe ownership itself is the problem. Rather, I would suggest the problem is the price of energy. We have large, leaky homes in part because consumers do not pay the full price of their electric, gas, and water bills. At the margins, energy prices can play a big factor in decisions people make about where to rent and buy, and how to manage their energy usage therein, but that marginal factor is not sufficient to drive more substantial reductions in home energy usage.

Here's a simple solution that harnesses private, market-based incentives to get property owners to make their own decisions about the best ways of reducing their energy usage: introduce tiered rate pricing, so that the marginal cost of energy usage each month rises as the total amount of energy used rises. It's revenue neutral, affecting the proper group of people: energy consumers, not taxpayers. It gives people multiple ways of adapting, from behavior changes to home weatherization to choosing smaller residences. It ensures that we protect the poor from suffering too much by ensuring that basic levels of utility usage are not priced prohibitively.

Finally, it addresses the core issue, the total energy used, rather than a tangential issue, how much energy of the total is wasted. After all, if consumers are sensitive to energy prices, and this program reduces wasted energy, then some of that wasted energy will still be used as it is translated into behaviors that consume more energy. The net savings is less than the waste because consumers will use more energy if the price is cheaper. However, if consumers are not sensitive to energy prices, then the only way for programs like this to work is if the government pays for 100% of the cost, plus handling the hassle of coordinating the improvements. An easy way to think about this is the thermostat. Some people set their thermostats lower in the winter and higher in the summer to save energy. Well, if we make meaningful reductions in how much energy is wasted, some of these people will modify their behaviors to set their thermostats higher in the winter and lower in the summer than they previously had them set.

Tiered pricing allows us to use the federal monies for investments in the public commons, from parks and bike paths to regional transit and passenger rail lines to safety net support like unemployment insurance and health insurance. Utility companies are already heavily regulated, including the prices they can charge, so this is not any new kind of government intervention. By providing additional revenue to utilities through increased prices, we can provide funding to couple with mandates they expand usage of renewable power sources like wind and solar energy.

If we combined this with bigger policy changes, from more diverse and comprehensive transportation policies to reducing or eliminating tax subsidies for McMansions to expanding walking and bike trails to enhancing high density affordable housing options, we could have a significant impact on energy usage in our residential communities while putting people to work in sustainable jobs, not jobs dependent upon government tax credits.

After all, as A Siegel quotes Doerr, the pricing mechanism is at the heart of the situation

In closing on this idea, I don't want to lose sight of the big picture, and that is the most -- and we recommended it to you before -- we agree the most important thing we could do to have America lead in this industry and generate a lot of jobs fast is to put a price on carbon

** This is a good insight into one problem of bargaining. Frequently, the people who benefit from a redistributive policy are concentrated, while those who are harmed are widely dispersed, so there is an ability for the few who benefit greatly to lobby for their view because it is costly for the many to pool their resources in opposition. Giving me $1 billion would be a great policy for me, my close friends and family, businesses in my neighborhood, my employer, my church, local charities, and many other economic actors within two or three degrees of me. If this were a policy that had a reasonable chance of gaining traction, I would have a significant incentive to spend millions of dollars lobbying for this, while any other individual taxpayer would have a hard time organizing an opposition, because the costs of that $1 billion are dispersed amongst the general taxpaying population, obscuring the cost for any particular individual.

P.S. Let me bring up a couple items from good conversation.

Two key issues with 'cash for caulker's I have:

  1. It still requires some up-front investment from homeowners, so only those who have some cash anyway for spending can take advantage of it.
  1. It isn't targeted at low-income households, which means it is throwing money at a problem that is not really about money.

In other words, it's the opposite of the three decades-old Weatherization Assistance Program, which

  1. fully funds energy efficiency enhancements for
  1. low-income households.

Originally posted to washunate on Wed Nov 18, 2009 at 06:08 PM PST.

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Comment Preferences

  •  the economics of the environment (3+ / 0-)
    Recommended by:
    AaronInSanDiego, sele, RLMiller

    offer many policy options. When prices do not capture the full costs of the goods in question, one of the simplest and most effective adjustments is to alter the price to better reflect the full costs involved. This ensures that consumers modify their behavior as they best see fit, rather than trying to use taxpayer dollars for private gain that often ends up subsidizing behaviors that would happen anyway.

  •  I appreciate the thought you've put into this. (8+ / 0-)

    Two points: I believe it's already being tried, with mixed success, and it might more properly be done at the producer level, not the consumer level.  

    I live in a neighborhood with tiered energy pricing, and a lot of my neighbors either don't understand or don't care about the connection between their HVAC use and their electric co. bills.  During the summer, one neighbor's bill is $500/month; mine is $10/month, and the extreme discrepancy is almost entirely due to air conditioning (they use it religiously, I hardly ever do).  They can afford to pay the bill, and they regard it as a reasonable cost for their comfort.  Obviously, there are people who can't afford such luxuries, so the poor get hit harder by tiered pricing.  (Then the politicians start talking subsidies, or different tiers for different neighborhoods, and it all falls apart.)

    The above illustrates both the potential pitfalls in tiered pricing and the irrationality of human nature.  Businesses tend to maximize profits, so tiered pricing might be better off instituted at the producer level...similar to a cap on carbon emissions.

    The cash for caulkers idea is what A Siegel calls a silver beebee; not a comprehensive solution, but one of many small pieces of a comprehensive energy solution (that happens to provide work for unemployed contractors).  So the two concepts are not mutually exclusive.  

    Anyway, I do appreciate that you've thought a lot about it.  Keep writing.

    •  I pretty much agree (1+ / 0-)
      Recommended by:
      sele

      To use that language, I'd suggest that the $23 billion would be a better silver beebee manifested as $23 billion worth of bike trails, or $23 billion worth of light rail, or $23 billion worth of investment in wind energy, etc, than $23 billion worth of tax credits to partially fund capital improvements to private residences.

      •  To me ... (3+ / 0-)
        Recommended by:
        RunawayRose, washunate, RLMiller

        the travesty is the limited nature of the vision and the structure of this proposal.

        Please be careful in reading my write-up: it was far from, imo, a hearty endorsement:

        "Cash for Caulking" potentially is a powerful path forward.

        That "potentially" is important as were the questions that followed.

        While I would be glad to see full costs being in energy billing, analysis after analysis after real-world experience have shown that the price signal is only part of the equation. Reality is that energy is quite complex -- and the home energy system is quite complex.  Most of us simply don't understand it well to judge where investments should be going to have greatest effect. (Thus, part of the problem with the proposal -- not enough of a role for 'experts' such as energy auditors.)

        And, this doesn't seem to have measures that do anything serious to engage landlords in the process. And, nothing about tightening building codes (within Waxman-Markey).

        And, well, the auditing measures. And ...

        While I like the idea of energy efficiency being central to discussion of jobs creation, as I wrote elsewhere, 'the devil is in the details' ...

        Now, want some perspective on what I'd like to see, look at WIN to the sixth power

    •  After my parents saw their (3+ / 0-)
      Recommended by:
      RunawayRose, washunate, RLMiller

      energy bill climb to nearly $900, they finally did some things to address the problem with their air conditioning usage, by installing a heat-exchanger type unit in their bedroom and using the central AC less. Those changes plus the change in weather brought their bill down dramatically. My brother-in-law who installed his own solar panel system still thinks they would be a good candidate for that, but they have some concerns about their roof I think.

      Economic Left/Right: -4.00 Social Libertarian/Authoritarian: -6.82

      Your argument is not Scottish.

      by AaronInSanDiego on Thu Nov 19, 2009 at 02:01:59 AM PST

      [ Parent ]

  •  Seems Kind of Blame-and-Punishment Oriented (10+ / 0-)

    A lot of these irresponsible owners live in older housing because they're lower income. I live in such a region of the country.

    And we're at one of the two times within a century where "all other things" are pretty obviously least equal and the private sector has proven spectacularly bad at allocating resources lately.

    Raising or taxing energy prices can be highly punitive on the poor.

    We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

    by Gooserock on Wed Nov 18, 2009 at 06:27:06 PM PST

    •  that's what a pricing mechanism is (1+ / 0-)
      Recommended by:
      RunawayRose

      It's 'blame and punishment'. It suggests that consumers, not other people, should pay for the costs of their consumption.

      A lot of these irresponsible owners live in older housing because they're lower income.

      If we as a society believe that that disadvantages some people, then we should provide transfer payments to those people. As I said, when money is concerned, the fundamental problem is wages. In fact, here's the thing. Most poor people in the US have much more urgent needs than reducing GHG emissions. They're not the ones looking for a 30% tax break on a $10,000 piece of equipment, or who could front 50% of the cost of a $3,000 retrofit. They don't need partial payments for weatherization. They need access to wages, health insurance, education, and so forth.

      And we're at one of the two times within a century where "all other things" are pretty obviously least equal and the private sector has proven spectacularly bad at allocating resources lately.

      And one of the biggest misallocations of resources has been government tax policy transferring money to homeowners. We should shift our focus from home ownership to affordable housing. Our housing subsidies are one of the core reasons we have McMansion sprawl.

      •  Why good economics can be bad policy (2+ / 0-)
        Recommended by:
        RunawayRose, washunate

        I agree with many of your points, and your basic arguments are in no way controversial as far as the economic theory you're appealing to.  Mostly, it's Micro Economics 101 Motherhoods.

        But economic efficiency (or even Pareto Optimality, that bastard child of efficiency) is not an end in and of itself.  Making good policy is itself a form of constrained optimization :-)  Here are some of those constraints:

        • Policy needs to be simple enough to implement
        • Policy needs to have some group backing it that has enough clout to get it established in your political system
        • Economic efficiency is nice, but Perfect Efficiency Is The Enemy Of The Good.
        • Sometimes macro economic considerations really should be a higher priority than micro economic considerations like efficiency.  Right now, spending done fast with some waste, or with less than ideal effects on the distribution of wealth, can still be a very good things.

        Peak load pricing is a good idea, and I'm all for it.  But it takes time, effort, lots of capital investment, and political will to get it in place.  It isn't going to happen quickly, and it certainly isn't going to happen quick enough to act to help raise aggregate demand.  Which it needs very much to do.

        I do agree with Gooserock about you overrating the effect of moral hazard -- let's be frank, moral hazard is something that people talk about for the οἱ πολλοί (hoi polloi to the rest of ye) -- i.e. for most of us lower income suckers.  I think your priorities are wrong here, since, as Gooserock points out, a lot of people who have older, badly insulated homes or businesses weren't negligent; the market simply did not offer appropriately energy efficient properties, which is mostly a failure of regulation.  At least you take income distribution seriously, which a lot of people making U of Chicago type arguments don't give a rat's ass about.  On the whole, I think you're right about making sure that help goes more to lower income folk than higher income.  All things being equal, anyway.

        I however agree with you about the need for energy prices to reflect the external costs of using too much fuel, and of burning too much carbon.  But it's also worth remembering that while energy efficiency can be pretty price elastic long run (Europe is great proof of this), it's not all that elastic short run.  So simply letting the price rise is not enough: you have have public policy in place to effectively increase the short term elasticity, by helping people migrate.  This may not appear efficient from an economic perspective, but is probably the most efficient policy that can also be implemented in the real world.

        "If another country builds a better car, we buy it. If they make a better wine, we drink it. If they have better healthcare . . . what's our problem? "

        by mbayrob on Wed Nov 18, 2009 at 08:52:29 PM PST

        [ Parent ]

  •  I disagree on core premise #1. (3+ / 0-)
    Recommended by:
    A Siegel, pstoller78, itzik shpitzik

    All things being equal, most private individuals will waste large amounts of their discretionary income on cheap plastic crap from China.

    And most private companies will give it to executives in the form of hyperinflated pay, rather than simply charging less.

    Now it's one thing to say you believe private individuals should spend their money as they see fit.  It's far different to claim they 'know best how to allocate it'.

    Those who labour in the earth are the chosen people of God. - Thomas Jefferson

    by Ezekial 23 20 on Wed Nov 18, 2009 at 06:29:19 PM PST

    •  I'd empirically dispute that (0+ / 0-)

      All things being equal, most private individuals will waste large amounts of their discretionary income on cheap plastic crap from China.

      Actually, most income goes to housing, food, clothing, education, healthcare, transportation, and similar mundane areas. Cheap imports from China are actually a pretty small part of our economy.

      Now it's one thing to say you believe private individuals should spend their money as they see fit.  It's far different to claim they 'know best how to allocate it'.

      That's the definition of private property. The owner knows best how to allocate it. There's an easy test of this. If you don't believe you know best how to allocate the money in your checking account, send it my way. I'll allocate it for ya.

      •  Written above (3+ / 0-)
        Recommended by:
        RunawayRose, washunate, Ezekial 23 20

        "discretionary income" ... housing, healthcare, transportation, and much of the "mundane areas" aren't discretionary.

        And, well, as to much of the presentation in this discussion, it has a strong streak of libertarian to it, imo, where we will have to agree to disagree.

        •  right, what's discretionary (1+ / 0-)
          Recommended by:
          RunawayRose

          is an interesting discussion in and of itself. It's sort of like the question about what's consumption and what's investment. But I think it's very important to point out that cheap crap from China really isn't a very big part of our economy. I am not a fan either of China-bashing or of bashing consumers for buying stuff from China.

          And, well, as to much of the presentation in this discussion, it has a strong streak of libertarian to it, imo, where we will have to agree to disagree.

          I would concur on both accounts. That's one of my core interests in DK, a forum to exchange ideas with a range of people who are willing to agree to disagree and don't share the same hesitance to use other people's money.

          If Ron Paul was pro-choice, had a slightly more expansive view of what constitutes the basic role of government (in particular, the role of safety nets), and caucused with the Democrats, that would reasonably well align with my world views. Of course, if Nancy Pelosi had opposed dumb wars and tax breaks for the rich while suggesting impeachment should be on the table, that would really align well with my views.

          I think this perspective is important for Democratic Party politics because I'm the actual 'moderates' and 'centrists' that lean Democratic but frankly don't understand or agree with a lot of actual party politics. I particularly enjoy when my position is taken for being some hyper-leftie, as if only tree-hugging commie socialists value the Constitution and the rule of law and so forth, so sometimes I do strongly emphasize the libertarian part for contrast.

          That's a little tangential to this immediate discussion, but I really think where the Dems have gone wrong, and not just wrong in a policy sense but also wrong in an electoral sense, is allowing so much of the leadership and establishment of the party to forget the limited part of the phrase limited government. Both aspects are key to Liberalism. There are a whole range of issues, from corporate bailouts to detainee policies to the drug war, where Democrats have signed onto unlimited government in ways that do not make good policy and do not make good electoral politics.

          •  Very simply ... (2+ / 0-)
            Recommended by:
            RunawayRose, washunate

            while there is a form of visceral appeal to libertarianism, there is a simple fact that wrapping oneself in it (and that perspective of the world) is to take a stand that climate change is irrelevant and we are simply going to continue down the path that we are on.  There are problems too big for individuals and there are issues too big to simply embrace "it's my land and stay off it".  There are limits ...

            •  Yeah, where's the line between libertarianism and (0+ / 0-)

              anarchy? The more you go down that slope, the closer you get to no governance at all. That's the problem with libertarianism.

              But in the American political context, I think it's mostly a problem of how we define and label our various political categories. I think that's to our strategic detriment in the Democratic party, because we mostly fall for the corporate line about there being a 'left', 'center', and 'right'.

              What the left/right continuum obscures is the fact that there is no one unifying principle of either the left or the right. Rather, there are several foundational principles that have natural tensions with each other, and they exist all along the spectrum. The corporatists and the theocrats know they're outnumbered on all sides, which is why they team up to try to divide and conquer the rest of us.

              What's confusing to us younger folks is why Dems act so afraid of the minority wackos and thieves.

              For example, if you think we need to do something on a scale much larger than WAP energy efficiency for low-income households, why bother with couching things in language about tax credits and getting retailers involved and so forth? Just say that you're proposing a program for the government to audit homes and office buildings to analyze and deliver enhancements. Make the decision of what should be done and take care of doing it. If you think such direct government planning is unpopular because people trust their own decisions over government, then that reveals a need to reflect on why it is people think government would be an inferior actor for the problem at hand.

      •  If I had money in my checking account (0+ / 0-)

        I wouldn't be sending it to you, since I don't trust your ability as a private individual to allocate it correctly.

        But I do believe my taxes should be higher.  You're a libertarian?  I'm a socialist.  I would welcome higher tax rates to pay for far stronger social safety nets.  Universal healthcare, a living wage pension for the elderly, etc.

        Those who labour in the earth are the chosen people of God. - Thomas Jefferson

        by Ezekial 23 20 on Thu Nov 19, 2009 at 12:04:31 PM PST

        [ Parent ]

        •  it's an interesting predicament (0+ / 0-)

          Whom do you trust?

          I wouldn't be sending it to you, since I don't trust your ability as a private individual to allocate it correctly.

          Yet, that's precisely what a tax credit plan calls for. It calls for sending your money to private individuals to allocate. It incentivizes behavior loosely by simply throwing money at a general direction, rather than directing precisely what kind of conduct needs to occur. What I'm suggesting is that by your criteria, these kinds of policy mechanisms are inferior to alternatives.

          The opposite of that kind of program would be for the government to secure the work directly. Have government decide what enhancements should be made, and have government provide the enhancement.

          But I do believe my taxes should be higher.  You're a libertarian?  I'm a socialist.  I would welcome higher tax rates to pay for far stronger social safety nets.  Universal healthcare, a living wage pension for the elderly, etc.

          It's funny; that's precisely what I think the money should be spent on instead, particularly universal unemployment insurance and universal health insurance. And I have lots of ideas for taxes that should be raised.

          And more broadly, I'm not sure why there need be much conflict at all between libertarian and liberal ideas. Both ideas in the American context are characterized in the belief in limited government, in the core unit of society being the individual, in the Constitution and the rule of law. The corporatists are for more radical. Yet they're the 'centrists' in DC parlance, the compromise middle ground between socialists and libertarians.

  •  What's the opportunity cost of (5+ / 0-)

    30 million unemployed? It's $3.15 trillion.

    You need to think more broadly in your analysis:

    1. All other things are not equal. We're in a massive liquidity trap - thus, subsidizing spending stimulates people to spend money they wouldn't have otherwise.
    1. People don't always know best. From the advent of Keynes' "animal spirits" to the discoveries of behavioral economics, we know that people act irrationally in all sorts of ways - and the relevant thing here is that we overreact to recessions because we are risk-averse. This causes consumption to shrink, which causes employment and investment to shrink, which confirms people's fears, and we get a negative feeback loop.
    1. Full employment is an inherent element of the public welfare.
    •  I think you know my thoughts on universal (2+ / 0-)
      Recommended by:
      RunawayRose, mbayrob

      unemployment insurance :)

      I absolutely agree. In addition to a sound safety net of unemployment insurance and health insurance, we should have massive public investments in our backlog of deferred maintenance and construction of new infrastructure.

      That should be done by the federal government on public infrastructure, not handed out as partial subsidies for private property that depend upon the property owner having sufficient resources to deploy to take advantage of the money.

      •  Ok (3+ / 0-)
        Recommended by:
        RunawayRose, mbayrob, A Siegel

        But that doesn't solve the problem that:

        1. We have a lot of unemployed people who need jobs right now.
        1. We have a lot of homeowners who are irrationally cutting back on investments.
        1. We're not very energy efficient in how we heat our homes.
        1. We could make progress both our unemployment problem and our efficiency problem by lowering the cost of these improvements.
        1. Taxing people more for inefficient use is a politically tone-deaf way to produce the same effect.
        •  Or, a different perspective... (0+ / 0-)
          1. We have a lot of unemployed people who need a safety net right now. Jobs in and of themselves are less urgent, particularly when we're talking temporary and volatile jobs, or exciting career paths like being a cashier at Home Depot.
          1. We have a lot of homeowners who are rationally cutting back on investments right now. And the ones who can put up $1,000 or $2,000 are not the ones who would be doing these kinds of things anyway.
          1. Our housing policies subsidize places that create large, ineffecient housing developments.
          1. At what cost.
          1. Actually, of the two approaches, my approach is the one that does not involve taxation.

          More fundamentally, I really like your point #5. You're basically saying that Americans believe they have a right to cheap energy, and if they're over-usage of energy causes problems, somebody else should pay them to fix it.

          •  Well, that's politics, isn't it? (1+ / 0-)
            Recommended by:
            RunawayRose

            My largest problem with your position is that, like a lot of economists, you know your micro, but you don't know your political economy.  This is not uncommon, since most folks who are trained in economics don't know very much about political economy, to the point that they haven't really read or thought very much about things that got pretty well analyzed and discussed in the 19th Century by a number of people, including Marx.

            You're not a major offender in this respect, since at least you understand and care about income distribution.  But I don't think you appreciate the extent that economic models tend to shy away from certain assumptions that underlie General Equilibrium Theory and welfare economics.  In particular, economist tend to like win-win analysis like Pareto Optimal models -- everybody wins, so we don't have to argue about the redistributive effects of policy.  So let me take your Pareto and raise you a Hemmingway -- Pareto Optimality is in the "wouldn't it be pretty to think so" category.

            The problem is that real policy is almost never Pareto Optiimal (i.e., win-win).  Somebody almost always benefits at someone else's expense.  This is not a bug -- it's a feature of policy, and sometimes, it's a very desirable part of policy.

            So yes, if you want people to change their energy consumption habits, while it may go against your economic scruples, bribing compensating people to do so needs to be a part of your public policy tool kit.  The Viking guy is right about this.

            "If another country builds a better car, we buy it. If they make a better wine, we drink it. If they have better healthcare . . . what's our problem? "

            by mbayrob on Wed Nov 18, 2009 at 09:05:27 PM PST

            [ Parent ]

          •  Ok... (1+ / 0-)
            Recommended by:
            RunawayRose
            1. Jobs are not less urgent, considering that they pay more and provide more benefits than UI, allow people to keep building up contributions to Social Security and Medicare, and most importantly create $105k a year in goods and services per worker (on average).
            1. This is a perfect example of the paradox of thrift - by cutting back, homeowners are making it worse for everyone.
            1. Why is this an argument against making them more efficient?
            1. $23 billion. Given that the multiplier on cash for clunkers was $36 billion out for $3 billion in, the question is: why give up $253 billion in added GDP?
            1. "introduce tiered rate pricing, so that the marginal cost of energy usage each month rises as the total amount of energy used rises" is essentially a carbon tax.

            And I'm saying that trying to get people to weatherize their homes by making electricity more expensive is worse politics than subsidizing them to do it.

  •  No. Even though inclining rate structures.... (3+ / 0-)
    Recommended by:
    RunawayRose, optimo, A Siegel

    ...as the diarist suggests, are a good idea (the utility I work for has had inclining rates for years), they are an extremely limited mechanism that swend a symbolic message more than producing significant results.

    1. "All other things being equal, private parties know best how to allocate their resources." Sez who? I mean really? In energy usage at the consumer level, especially residential? The diarist is dreaming a free market ideological fantasy. Doesn't work that way in the real world of peoples homes.
    1. High usage does not equate to inefficient or wasteful usage. A five person household uses a lot more energy than a one or two person household. If you make inclining rates severe enough to actually alter behavior in a measurable and predictable way, then you are punishing the family with three kids, even if the house itself is energy efficient. Same with businesses.
    1. This has no impact on unregulated energy sources--- bulk fuels primarily (oil, propane, wood), and that is what most people heat with in large parts of the country, and cook with, heat water with, dry clothes with.

    Inclining rates are nices as far as they go but they are a weak device that cannot possibility be anywhere near as effective as direct investment in conservation and efficiency, and in particular...residential thermal work, building envelope and heating/cooling system efficiency.

    This is not what I thought I'd be when I grew up.

    by itzik shpitzik on Wed Nov 18, 2009 at 06:40:20 PM PST

    •  that is what we believe (0+ / 0-)

      Sez who? I mean really? In energy usage at the consumer level, especially residential? The diarist is dreaming a free market ideological fantasy

      I have all sorts of ideas of taxes that should be implemented. But generally speaking, people are very protective of their money. Generally speaking, people believe they know best how to spend their money. This is one of those ideas that is so deeply engrained into us, many people are not aware of this. It's the 'get off my lawn' view of property. There is an owner, and that owner has the right to determine what to do with it. It doesn't matter whether the usage actually is 'the best' because 'the best' is defined by what the property owner chooses to do with it.

      Doesn't work that way in the real world of peoples homes.

      That's because, as you say, current increment rate pricing is largely symbolic. I suggest, if we are this concerned about GHG emissions, we should change that from symbolic to meaningful.

      High usage does not equate to inefficient or wasteful usage. A five person household uses a lot more energy than a one or two person household. If you make inclining rates severe enough to actually alter behavior in a measurable and predictable way, then you are punishing the family with three kids, even if the house itself is energy efficient. Same with businesses.

      That's an interesting perspective. The core question is, are children free-riders; should the cost of raising them be borne by society? Or, are parents responsible for the costs of their children? I'm not the one saying household energy inefficiency is a problem; I'm assuming that as true and suggesting a better method of dealing with it.

      A five person household uses a lot more food than a one or two person household. Who is responsible for providing food for a family? This is really a deceptively complex question about how we allocate resources in society.

      What I would suggest is that energy usage shouldn't be exempt from that discussion.

      This has no impact on unregulated energy sources--- bulk fuels primarily (oil, propane, wood), and that is what most people heat with in large parts of the country, and cook with, heat water with, dry clothes with.

      Oh sure, we'd need to include all sources of energy that power homes. I'm not saying utility companies are the only provider. But they are the easiest place to start because they already have measuring and billing systems in place. If one of people's behavior modifications is that they chop some local wood for the fireplace instead of shipping oil or coal across the country, I'd say that's an improvement.

      •  I think this is nice, but just theoretical. (2+ / 0-)
        Recommended by:
        RunawayRose, A Siegel

        I've worked in the utility field since 1997 at a utility that promotes efficiency & conservation. Before that I ran my state's Weatherization program. I have learned a lot about what motivates people and does not, and what the market barriers are to change. So what I'm saying is not theoretical, IMO.

        This is not what I thought I'd be when I grew up.

        by itzik shpitzik on Wed Nov 18, 2009 at 07:08:30 PM PST

        [ Parent ]

  •  Some of your long-term solutions ... (6+ / 0-)

    ...are ones I agree with. But "Cash for Caulkers" is a short-term program, one which complements the $5-$6 billion already slated for weatherization (which includes apartments). Much of what you're talking about will take years to bring about.

    Don't tell me what you believe. Tell me what you do and I will tell you what you believe.

    by Meteor Blades on Wed Nov 18, 2009 at 06:44:07 PM PST

    •  unfortunately, I think that's the political (0+ / 0-)

      situation. It seems to me we're in this mindset where these kinds of policies are what we'll do. We can't give meaningful, direct support to people who need it most; we end up giving these partial tax incentives that target people who have some money to spend anyway.

      $23 billion would feed an awful lot of people and provide an awful lot of visits to the dentist and eye doctor and all sorts of other things like that.

      And it's not like many poor families renting a drafty apartment in a run-down neighborhood are going to benefit from programs like this, whether it's cash for clunkers or homebuyer tax credits or weatherization tax credits.

      I just have to tip my hat to the NAR, NAHB, MBA, et al, who have so successfully captured our notions about housing that we have difficulty thinking in terms that are not taxpayer transfers to homeowners.

      •  But there is already the Weatherization ... (3+ / 0-)
        Recommended by:
        RunawayRose, A Siegel, washunate

        ...Assistance Program, funded, thanks to the stimulus package, at $5 billion over the next two years. This already directly benefits poor families because they don't have to pay. The program is slated to weatherize about 810,000 homes occupied by low-income families in that two-year period.

        Don't tell me what you believe. Tell me what you do and I will tell you what you believe.

        by Meteor Blades on Wed Nov 18, 2009 at 07:25:38 PM PST

        [ Parent ]

        •  don't mean to belabor this (0+ / 0-)

          but isn't that the key difference between a 50% tax credit for all homeowners and a program specifically targeting low-income Americans that covers everything?

          From the website

          The Weatherization Assistance Program enables low-income families to permanently reduce their energy bills by making their homes more energy efficient. During the last 32 years, the U.S. Department of Energy's (DOE) Weatherization Assistance Program has provided weatherization services to more than 6.2 million low-income families.

          and

          Through this program, weatherization service providers install energy efficiency measures in the homes of qualifying homeowners free of charge. These are not expensive upgrades—the average expenditure limit is $6,500 per home—but they are effective, and energy savings pay for the upgrades within a few years. DOE documents the savings and compares them against costs, so that over the years it can determine the efficacy of these measures.

      •  That's not just politics. It's reality (1+ / 0-)
        Recommended by:
        RunawayRose

        I largely agree with you about the subsidization of home ownership.  But like a lot of people with economic training, you are treating the politics of this as somehow exogenous from the situation.  It isn't.  Good policy needs to take that into account.

        I don't know if you've ever read the Monetary History of the United States, by Milton Friedman and Anna Schwartz.  One of the most interesting things about the book is not what Friedman and Schwartz took into account, but what they did not get.  In the 1880s and 1890s, there was a great deal of monetary instability in the US, which F and S treat as exogenous.  Which it certainly was not -- the monetary policy they analyze was to a great extend the cause of the trouble -- their model, in short, was too narrow to let them see what would be obvious to anybody who understood what was driving politics back then: rural people who believed, correctly, that national policy favoring gold over silver was really enriching the Eastern banks over rural and Western debtors, since the gold standard was deflationary.

        Friedman and Schwartz's errors here are not uncommon among economists, who tend to abstract away real world interactions between politics and economic policy, and who by doing so, support policies that cannot work in the real world.

        "If another country builds a better car, we buy it. If they make a better wine, we drink it. If they have better healthcare . . . what's our problem? "

        by mbayrob on Wed Nov 18, 2009 at 09:18:10 PM PST

        [ Parent ]

        •  isn't that the value of discussion? (1+ / 0-)
          Recommended by:
          RunawayRose

          Friedman and Schwartz's errors here are not uncommon among economists, who tend to abstract away real world interactions between politics and economic policy, and who by doing so, support policies that cannot work in the real world.

          Isn't that a role of discourse, though? Let's take an example other than one dealing with housing, say, the AIG bailout.

          Clearly, the political situation is that big financial firms have significant lobbying power, both formally and informally. But if we don't push back in our discourse, say no, there are other options, then to me, that describes a very fatalistic system. The politics of corporate influence is stacked against us, so we can't say anything to the contrary, because it's not politically feasible anyway, so corporate interests get even more entrenched, and so forth.

          Or take the drug war. There was a huge effort on DK, for instance, to make those of us who advocate for an end to the drug war to just drop the issue because it's unreasonable to expect Obama to push for that and we have other priorities and it's not that big a deal and nothing can happen politically and whatnot. Well, that's a self-fulfilling prophecy. If we hadn't pushed the drug war through things like Open for Questions, discussion wouldn't have happened about it.

          I do not think that education or discourse or whatever is sufficient to create good policy. I do, however, think it's a valuable part of the process.

          Otherwise, honestly, what are we doing here? You don't really think a few words posted at some website have any direct political power vis a vis K Street and Wall Street, do you?

          Yet, those of us who grew up in the Reagan-Bush era have watched in a combination of horror and amazement at how insanity and absurdity pass uncritically as reasonable dialogue because the GOP has been so successful at framing how people think about things.

          Now, of course, on my personal absurdity level of torturing people, bailing out AIG, and offering 50% tax credits for weatherization, I hold one of those three as significantly, enormously less absurd than the other two.

          But I still think it's a whole lot better to spend that money either targeting people in need (safety net spending) or targeting public investments (like building wind turbines, rail systems, parks, bike paths, etc).

          Or to take one last example, healthcare. It may not be politically feasible to suggest a nationalization of healthcare. But it is worth pointing out that the military runs a government-run healthcare system. It is worth pointing out that the VA runs a government-run healthcare system. It is worth pointing out that a universal, taxpayer-funded health insurance system is good policy, even if we're told by our political leaders that it's 'off the table'. If nothing else, it moves the goal post while revealing that there are broader opinions than just those held by the DC establishment.

          The process of discussion itself I think is valuable in redefining that which is politically feasible.

  •  Nice ..now I'm irresponsible because I'm poor (0+ / 0-)

    great.

    I should be responsible and sell my house to somebody who can afford to be reponsible...in your definition..you must work for the real estate agents/building dept/slumlord cartel. I have heard just this same patronizing shit from my building dept in my fair town.

    I'd say fu, I'd rather slap you.

    I am not a number, I'm a free man!

    by KenBee on Wed Nov 18, 2009 at 10:38:33 PM PST

    •  no, the judgment of irresponsibility (0+ / 0-)

      is made by those who say you're not doing something right. I'm saying you're doing precisely what you should do. You're spending your limited resources on things that are more important than solar panels and new windows and whatever else people trying to get a tax credit will buy. I'd wager you don't have $2,000 sitting around to take advantage of a program like this.

      Aside from that, have you heard of the Weatherization Assistance Program? It's not a tax credit. Rather, it's a taxpayer-funded program that targets low-income households for providing energy efficiency enhancements. States have developed specific contractors who go out and assess what should be done and then do it. There's no money involved trying to incentivize behavior. Rather, they simply do the desired behavior.

      Here's the state contacts links page.

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