Bob Gohn/Pike Research: The Class Warfare of Dynamic Pricing

Excerpted from The Class Warfare of Dynamic Pricing,  by Bob Gohn, on  the Pike Research Blog

Dynamic pricing for electricity has long been the holy grail of the smart grid, particularly for smart metering. The rationale is that if the retail price of electricity actually reflected the true time-based costs instead of a blurred monthly average, then consumers would become more efficient buyers, benefiting themselves, suppliers, the environment, and society. If we can choose to buy less during demand peaks when generation costs are highest, and buy more when the grid is underutilized, then overall electricity bills will go down, peak demand is reduced, and the associated environmental impacts are lessened. Everyone wins – so who’s to complain?

Well, quite a few consumer interest groups are complaining, ranging from the AARP to utility watchdog groups. While some complaints fit within the ongoing smart metering paranoia, there are legitimate concerns as well, including:

Low-income, elderly, and other disadvantaged groups may not be able to shift to off-peak use, and hence may face higher bills. Images of grandma turning off her oxygen, shivering in the cold or sweating out a heat wave because of smart meters are persuasive.

There is a general assumption that consumers will happily make “comfort vs. cost” tradeoffs in energy use. This is counter to the trend toward flat rate pricing elsewhere, including the telecom industry, heretofore the master of time-of-use pricing.

While there is little argument against “opt-in” dynamic pricing programs, most agree that dynamic pricing must be mandatory or implemented as an “opt-out” program to achieve the desired benefits. This muddles the message of enabling “consumer choice” via smart metering.

Underlying all these concerns is an assumption that for someone to win with dynamic pricing, someone else has to lose. The goal may be to reduce demand peaks and fill underutilized valleys, effectively lowering the average, but it is true that some will likely pay more with dynamic rates. The question is who?

Interestingly, opposition to dynamic pricing can be found on both ends of our politically polarized spectrum. Those toward the right fear Big Brother taking control of their thermostats and appliances (here, utilities = government). Those bent leftward see the social good of universal electricity being corrupted, leaving the vulnerable unprotected (here, utilities = big business). I am sure smart grid advocates would love to unite Tea Party and Occupy Wall Street folks, but not this way!

You  can read the rest of The Class Warfare of Dynamic Pricing,  by Bob Gohn, on  the Pike Research Blog. We  make only this observation – when uneven distribution of wealth is so extreme that the less-fortunate suffer morbidity and mortality for want of adequately efficient shelter, protection from extremes of temperature, the unevenness of that wealth distribution – it matters not whether we’re talking about housing stock and its efficiency, or energy to heat or cool it, we are inclined to set aside ideology, and find ways to insulate houses, provide clean and warm clothing and food, and prohibit energy companies from executing non-payment shutoffs absent a court order. We can then discuss ideology, or yell at each other, or do what passes for political discourse these days – later.  If this makes me intellectually dishonest, I’ll take the  weight for that.

Can Anyone Really Create Jobs? Yes We Can!

FDR Follow LJF97 on Twitter Tweet Writing in the NY Times, Adam Davidson of Planet Money, asks “Can Politicians Really Create Jobs? Davidson says “No.”

But with all due respect to Mr. Davidson, as Barack – The Candidate – Obama said, “Yes, We Can!”

And yes, Presidential candidates can create jobs – presidential campaigns are staffed by people. So obviously, the President can create jobs. Anyone can. All it takes is a need for something to get done. Whether you do it yourself or you pay someone else to do it, it’s a job. So the real question for the President, the Presidential Candidates, our elected Representatives in Washington and in State and Local Government, and for us ourselves, is not “Can we create jobs?” The real question is “How do we create 10 or 15 million good new jobs?”

Davidson talks about Keynes and the Chicagoans.

Chicagoans believe that economies can only truly recover on their own and that policy interventions only slow the recovery. It’s a puzzle of modern politics that Republicans have had electoral success with a policy that fundamentally asserts there is nothing the government can do to create jobs any time soon…. Romney, Perry, Herman Cain and the rest won’t come out and say, “If elected, I will tell you to wait this thing out.”

This is what Herbert Hoover said and why Franklin Delano Roosevelt won the election in 1932.

Instead, Republican candidates fill their jobs plans with Chicagoan ideas that have nothing to do with the current crisis, like permanent cuts in taxes and regulation. These policies may (or may not) make the economy healthier in 5 years or 10, but the immediate impact would require firing a large number of America’s roughly 23 million government workers.

What John Maynard Keynes said is less that “government can create jobs” but is more along the lines of

“in economic times such as these, when there is high unemployment because business will not hire people to create inventory that is likely to remain unsold, government is the only entity that has both the means and the will to create jobs.”

Less “government can” and more “Government Must!”

What is our government, after all? Lincoln said it best:

– “Government of the people, by the people and for the people.”

And there is much work to be done. We need to rebuild our infrastructure. This includes our crumbling current infrastructure of schools, roads, mass transit, etc. This will create jobs. We also know that domestic energy production peaked in 1971. International oil production seems to be peaking now, altho given the state of the world economy, and the state of infrastructure in Iran, Iraq, and Libya, the international peak may be a few years off. However, we should build a sustainable energy infrastructure. We will need it eventually. It is good for the environment, it will strengthen our economy and our state of national security. But rather than by using a simple program to provide loan guarantees to various corporations; the government should mandate that all government buildings should be well insulated, efficient, heated and cooled with geothermal, and powered with a mix of solar, wind, local hydro, biofuel (from waste, sewage, manure, etc., not food crops).

Just as police and courts exist to protect people from those who would point a gun at their heads and say “Your money or your life,” enforcement agencies must protect people from those who would discard toxic substances into the air we breathe, the water we drink, the food we eat, and the ground from which we farm.  We need to regulate banks and other financial firms. This too will create jobs. We need to provide health care to all our citizens, not just 5 out of 6, or 265 million out of 307 million, leaving 1 out of 6, or 45 out of 307 million without access to health care.

Davidson is wrong about one other thing. It’s not either go into debt to create jobs or fire people to cut taxes. Government has two sources of revenue: debt and taxes. It seems fair to me that a progressive tax policy, can be used to generate the revenues needed to pay for the jobs society needs to be done.  Wealth, after all, is not created in a vacuum. Wealth is created by people buying things that other people are selling. People want to buy Apple computers, music players, cell phones.  The people who design and build them get wealthy. The wealthy benefit by living in society; therefore demanding that all, including the wealthy, pay a fair share, as illustrated here, in my post on Progressive Tax Policy is fair, balanced, reasonable, and smart.

  • Over $100 Million, 57.5%. Plus 5.0% Social Security Insurance & Medicare.
  • Between $10 Million and $100 Million: 52.5%. Plus 5.0% SSI & M.
  • Between $5 Million and $10 Million: 42.5%. Plus 5.0% SSI & M.
  • Between $1 Million and $5 Million: 32.5%. Plus 5.0% SSI & M.
  • Between $100,000 and $1 Million: 22.5%. Plus 5.0% SSI & M.
  • Below $100,000: 17.5%. Plus 4.0% SSI & M.
  • Royalty income should be taxed at the same rates as wages and salary.
  • Income in the form of unsold stock options is tax-deferred and taxed when sold.
  • Inheritances of $1.0 million and under from a grandparent, parent, partner, or child should not be taxed. Inheritances from distant relatives, or that portion above $1.0 million should be taxed as indicated above.

So can anyone create jobs? The answer is a resounding ‘Yes, We Can!’

It's The Feedback – It's Always The Feedback

NYPD Interacts WithProtester  Follow LJF97 on Twitter Tweet On Nov 2, 2011, Senator Tom Udall of New Mexico introduced a Constitutional Amendment that would overturn the Citizens United decision of the Supreme Court (Technorati / WSJ).

The managers of Bank of America, who accepted $45 billion in TARP money, and decided to pay back its customers with a $5 per month fee for the privilege of holding a debit card, recently recently decided to reverse course on the fee for debit cards ( CBS Miami /Oregon Live).

Meanwhile, back on the streets, the authorities appear to believe that a show of force and the use of force by the police will quell the demonstrations. Yet the opposite is the case. As the cops overreact – pepper spraying 4 women in NYC (NY Times / YouTube), running over a lawyer for the Occupiers (CBS / Daily Mail / Salon / Yahoo) people get angrier and join the Occupation – causing the police to either moderate or escalate their response.

The Plot to Sieze the White HouseAfter a US Marine Corps veteran of the Iraq war was injured in Oakland other veterans come to occupations all over the country. They came quoting Smedley Darlington Butler, the Marine Corps General who wrote “War is a Racket,” ISBN: 978-1434407009, and figured in the events described in “The Plot to Seize The White House,” by Jules Archer, ISBN: 978-1602390362.

These are examples of balancing feedback loops, as described by Dana Meadows in Thinking in Systems, A Primer, ISBN: 978-1603580557. (A researcher with Jay Forrester at MIT and Dartmouth, Meadows founded the Sustainability Institute.)

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In Upstate NY, Gas Drilling Debate Gets Local

Follow LJF97 on Twitter Tweet Maria Scarvalone’s  coverage illustrates how rapidly and intensely opposition to “fracking” has spread in communities in Upstate New York. Her coverage suggest that the fracking question

“It’s like playing Russian roulette with your water supply.”

has energized voters – against the “fracking” scheme. Scarvalone’s piece makes the probability of “fracking” coming to pass seem unlikely. Add to that other constituencies who are likely to oppose fracking:  banks, property owners, title insurance companies, attorneys and  real estate professionals will influence the ongoing debate over “Fracking.” Continue reading →

NPR: 3 million without power after relatively minor weather events

Tovia Smith reports that we’re not doing well in recovering from last weekend’s weather. What should be a minor event – with solar, wind, batteries, and even petroleum-based generators all at the ready – is a warning of deficiencies in planning and preparedness.

Residents of the northeast are still coping with a weekend storm that was more trick than treat. Schools are closed and utility crews are working overtime to restore power in several states. More than 3 million people were without power immediately after the storm.

via After Storm, Some Northeasterners Still In The Dark : NPR.

Occupy Wall Street Is News Fit To Print

_Follow LJF97 on Twitter Tweet  Monday’s NY Times leads with a story on arrests of “Occupy Wall Street” protesters in Denver and Nashville.  I don’t understand how can we give corporations free speech, yet deny people the right to assembly. On the Op-Ed page, Friedman gets it right in Did You Hear The One About The Bankers, Douthat misses the point in “What Tax Dollars Can’t Buy, ” and on the editors provide some data that supports the protesters, here. Continue reading →

Paul Baran and the Origins of the Internet | RAND

This is part of a series dedicated to what we regard as “First Principles.” No set of principles, in our view, is more important than the notion that distributed networks are more robust than centralized networks, and that this applies to a military command-and-control network no more or less than it applies to a suburban neighborhood, rural community, or a city – any social network. Thanks to the RAND Corporation, much of the most important early work in network theory, written by the late Paul Baran, is readily available online for free. Math-averse readers should have no worries, Baran (and the uncredited authors at RAND) won’t require you to have any arithmetic, much less mathematical, background. Before you read the following excerpt introducing the RAND series, we’d like readers to think of themselves, their neighbors, and family and friends both near and far as members of, or “nodes” on, a social network.

In 1962, a nuclear confrontation seemed imminent. The United States (US) and the Union of Soviet Socialist Republics (USSR) were embroiled in the Cuban missile crisis. Both the US and the USSR were in the process of building hair-trigger nuclear ballistic missile systems. Each country pondered post-nuclear attack scenarios.

 

Centralized Network

 

US authorities considered ways to communicate in the aftermath of a nuclear attack. How could any sort of “command and control network” survive? Paul Baran, a researcher at RAND, offered a solution: design a more robust communications network using “redundancy” and “digital” technology.

At the time, naysayers dismissed Baran’s idea as unfeasible. But working with colleagues at RAND, Baran persisted. This effort would eventually become the foundation for the World Wide Web.

centralized switching facilities

centralized

distributed switching facilities

distributed

Baran was born in Poland in 1926. In 1928, his family moved to the US. He attended Drexel University where he earned a degree in electrical engineering. Afterward, Baran married and moved to Los Angeles where he worked for the Hughes Aircraft Company. Taking night classes at UCLA, he earned an engineering master’s degree in 1959–the same year he joined RAND.

At that time, RAND focused mostly on Cold War-related military issues. A looming concern was that neither the long-distance telephone plant, nor the basic military command and control network would survive a nuclear attack. Although most of the links would be undamaged, the centralized switching facilities would be destroyed by enemy weapons. Consequently, Baran conceived a system that had no centralized switches and could operate even if many of its links and switching nodes had been destroyed.

Baran envisioned a network of unmanned nodes that would act as switches, routing information from one node to another to their final destinations. The nodes would use a scheme Baran called “hot-potato routing” or distributed communications.

Baran also developed the concept of dividing information into “message blocks” before sending them out across the network. Each block would be sent separately and rejoined into a whole when they were received at their destination. A British man named Donald Davies independently devised a very similar system, but he called the message blocks “packets,” a term that was eventually adopted instead of Baran’s message blocks.

 

Distributed Network

 

This method of “packet switching” is a rapid store-and-forward design. When a node receives a packet it stores it, determines the best route to its destination, and sends it to the next node on that path. If there was a problem with a node (or if it had been destroyed) packets would simply be routed around it.

In a recent interview with Wired magazine, Baran discussed his vision of how the new technology might be used. “Around December 1966, I presented a paper at the American Marketing Association called ‘Marketing in the Year 2000.’ I described push-and-pull communications and how we’re going to do our shopping via a television set and a virtual department store. If you want to buy a drill, you click on Hardware and that shows Tools and you click on that and go deeper.”

In 1969, this “distributed” concept was given its first large-scale test, with the first node installed at UCLA and the seventh node at RAND in Santa Monica. Funded by the Advanced Research Projects Agency and called ARPANET, it was intended for scientists and researchers who wanted to share one another’s computers remotely. Within two years, however, the network’s users had turned it into something unforeseen: a high-speed, electronic post office for exchanging everything from technical to personal information.

In 1983, the rapidly expanding network broke off from its military part, which became MILNET. The remainder became what was called ARPANET. In 1989, the ARPANET moniker was retired in favor the “Internet,” which had also been described as the “information superhighway.” These days, the Internet continues to expand, stringing together the World Wide Web, an all-encompassing, affordable, universal multimedia communications network (see related RAND Review article).

Today, RAND continues to conduct research in this area. CEO and President of RAND Jim Thomson recently recalled Baran’s contributions. “Our world is a better place for the technologies Paul Baran has invented and developed, and also because of his consistent concern with appropriate public policies for their use.”

via Paul Baran and the Origins of the Internet | RAND.

Progressive Tax Policy

“Taxes are the price we pay for civilization.” – Oliver Wendell Holmes.

Progressive tax structures are not about punishing the rich. They are a recognition that wealthy people derive benefits from being in society. Warren Buffett, Steve Jobs, Bill Gates, Michael Jordan, Oprah, for example, got rich because people buy their products or watched them play basketball or on TV.  Paris Hilton is wealthy because her great-grandfather built a successful business. Their successes are wonderful. But their success should not require me to subsidize their lifestyles.

This tax structure can be implemented by October 31, 2012, and effective January 1, 2013, if not by Congress, then by Executive Order.

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BBC News – Global warming 'confirmed' by independent study

Richard Black, Environment correspondent for the BBC News, reports that – no shocker here –  global warming does, in fact,  seem to be occurring.

The Earth’s surface really is getting warmer, a new analysis by a US scientific group set up in the wake of the “Climategate” affair has concluded.The Berkeley Earth Project has used new methods and some new data, but finds the same warming trend seen by groups such as the UK Met Office and Nasa.The project received funds from sources that back organisations lobbying against action on climate change.”Climategate”, in 2009, involved claims global warming had been exaggerated.Emails of University of East Anglia UEA climate scientists were hacked, posted online and used by critics to allege manipulation of climate change

via BBC News – Global warming ‘confirmed’ by independent study.

Occupy Wall Street – Why are They There?

_Follow LJF97 on Twitter Tweet  Sometimes the “Invisible Hand” shoots itself in its “Invisible Foot.”

I’m here and most of us are here because we see dramatic inequities in the system.  We play by the rules.  The banksters are playing Three Card Monte and we are captive players – marks – in the game. They’ve marked the cards and stacked the deck. Bank of America, for example, took $45 Billion in TARP money and then started charging $5.00 dollars a month to depositors who hold a debit card. The bank borrows money for which it pays next to nothing. The bank charges usurious fees to customers who borrow money using credit cards, and it charges depositors absurd fees to access their funds on deposit in the bank.

This is one issue. Other issues include taxes, access to health care, education, jobs, and energy. All have to do with our nature as economic actors within the larger communities of the nation and the world. The question we are trying to answer, with a resounding “YES!” is “Should we live in an economic democracy?”

Continue reading →

Dennis Ritchie, 1941 – 2011

Dennis Ritchie,  co-inventor, with Brian W. Kernighan, of the C programming language, and co-author of the book of that name, and co-inventor, with Ken Thompson, of  the Unix operating system, died at his home in Berkeley Heights, NJ. He was 70.

He spent his professional career at Bell Labs, an iconic institution which boasted a patent a day for years, if not decades, and includes among its inventions both the transistor and the photovoltaic cell.

Like Steve Jobs, Dennis Ritchie was an iconic pioneer who changed the world significantly and dramatically. And like Steve Jobs, Dennis Ritchie’s work influences modern computers, from the servers in network operations centers to  desktop,  laptops, tablets, and phones.

One of the beauties of Unix is that it was itself written largely in C, so it was easy to port from one line of computer, say the DEC PDP 9 to the next, say the DEC PDP 11, and from the Mac built on the Power PC to the Intel X-86. The Unix operating system migrated from telephone systems and switches to workstations from HP, IBM, & Sun, to the NeXT machines and then the Mac.

Back in the late ’80’s and ‘early to mid-’90’s, when I worked as a programmer and DBA on Unix systems, most of the people who used workstations running HPUX, AIX, SunOS and Solaris knew they were working on Unix computers, and were familiar with C, C with Classes, C++, etc. But I would be astounded if today more than 0.01% of the current population of MAC, iPad, iPhone, iPod Touch, or Android users know that they are working on a Unix C / C++ (OS X, iOS) or Linux C/C++  (Android) device. But that’s part of the elegance of Unix.

There’s another elegance to all this. Ritchie worked on the development of an operating environment and software development system which migrated from telephone company labs and network operations centers to the phones that many of us carry in our pockets and on our belts.

Who knew when he wrote “Hello world” that he was introducing us to a new virtual world that was saying hello?

Corporations Are NOT People

_Follow LJF97 on Twitter Tweet  The Supreme Court, in “Citizens United (against the citizens)”  said, as Gov. Romney put it “Corporations are people, my friend.”

The people at “Occupy Wall Street” say, “I’ll agree that ‘Corporations are people’ when the government executes one.”

and “If a Corporation is a person then why isn’t it murder to declare bankruptcy? ”

A lawyer I consulted rationalizes the notion that “Corporations are people” by arguing that corporations have the rights to be secure against unreasonable search and seizure, as guaranteed by the Fourth Amendment, in the Bill of Rights, ratified 15, December, 1791.

However,  it is the people who own the corporation and the people who work in the corporation who have the right, guaranteed by the Fourth Amendment, to be secure against unreasonable search and seizure – not the corporation.

The corporation can not exist without owners. A corporation is a piece of property, like a car, a house, a gun, etc. These objects have no rights. When an accused shooter goes on trial, it is the person who allegedly squeezed the trigger, or the person who paid for the “hit.” It is not the weapon. As the National Rifle Association might say, “Guns don’t kill people, people use guns to kill people.”

While people can own one or more corporations, in whole or in part, people may not own other people. This, i.e. slavery, described by Barack Obama as the “Original sin of America,” was claimed under the rubric of “States Rights” referenced in the “Declaration of Causes of Seceding States” on 24, December, 1860. However, it was voided by the Thirteenth Amendment, ratified on 6, December, 1865 and the Fourteenth Amendment, ratified on 9, July, 1868.

Additional counter-arguments can be found in Marjorie Kelly’s “The Divine Right of Capital” (ISBN 1576752372).

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Steve Jobs, 1955 – 2011

 

Steve Jobs, with Macbook Air Many of us want to change the world. And we all to to varying extents. Some for the better, some for the worse, some significantly and dramatically, others less so.

Steve Jobs changed the world significantly, dramatically and in many ways for the better.

Because of their focus on “Computers for the rest of us” he and Steve Wozniak could have called the company they built “Prometheus Computers.” The Apple II, Lisa, Mac, Newton, iPod, iTunes store, iPod Touch, iPhone, iPad, are, in a sense, like the fire ‘stolen’ in the myth by Prometheus and given to man. Jobs, however, while known for being tough, was not known for being pompous.

He will be missed by his family and friends. His ideas will be missed by the rest of us.

Goodbye Steve, and thanks.

 

100% Clean Renewable Energy in 25 Years

Dolphins surfing
Follow LJF97 on Twitter Tweet The  observable fact that dolphins surf is something we humans need to think about.

Amory Lovins, of the Rocky Mountain Institute, coined the term “Negawatt” when he said “The cheapest unit of energy is the one you don’t have to buy.” The next cheapest, the “Nega-Fuel-Watt” is the unit of energy that doesn’t require fuel.

  • Insulation Nega-Watts allow less power to heat or cool a given space.
  • Solar Nega-Fuel-Watts transform photons into electricity or heat.
  • Wind Nega-Fuel-Watts transform moving particles of air into electricity.
  • Geothermal Nega-Fuel-Watts transform the heat of the earth into heat or electricity, or use thermal gradients to cool a space.
  • Hydro Nega-Fuel-Watts transform moving particles of water – currents – to generate electricity.
100% Clean Energy
100 Gigawatts Wind $300 Billion
100 GW Marine Hydro $300 B
50 GW Solar $200 B
50 GW Geothermal $200 B
200 GW Equiv Efficiency $200 B
A Smart Grid $100 B
500 GW or GW Equiv. $1.3 Trillion

I’m not sure if Lovins first public use of the term Negawatts was in Montreal in 1989 (here) or in Foreign Affairs in 1976 (abstract here), whether 22 or 35 years ago. Regardless, our current energy paradigm today is the hard fuel based path Lovins criticized 35 years ago. While we are turning away from nuclear, as documented by Mycle Schneider in the WorldWatch Report (here) – the latest radioactive nail in the radioactive coffin being the fatal explosion at a reprocessing facility in France on Monday, Sept. 12, 2011 (here) – we burn literally mountains of coal and oceans of oil and gas (According to the DoE, in 2010 we burned 1,085,281 thousand short tons of coal and 15,022 thousand short tons of coke (here). And there are consequences.  We suffer oil spills, polluted water, mercury, coal mine disasters, nuclear power plant melt-downs, we fight wars …

Wind and solar don’t burn fuel. The winds blow, the sun shines, you put a widget in the path of those moving particles in the air or those photons of light and you get electricity – without greenhouse gases, radioactive wastes, toxic wastes, and it costs less. So the question is not ‘Can we meet our energy needs with clean, sustainable renewable energy technologies?” The real question are How? How Much? And How quickly?

We could do it in 25 years if we wanted to.  And we should, for our children, our grandchildren, the cetaceans with whom we share our oceans, and other charismatic megafauna with whom we share our world.