27 July 2016

Rules!? We Don't Need No Stinkin Rules

These endeavors have been 99.44% about those events and topics which are interesting to those of us who indulge in relational database and quant activities. Unlike many such blatherings, they are not about demonstrating technique which is readily available to read in texts, both dead trees and on the innterTubes. The macro concerns, in a nutshell.

One of those concerns, which pops up Whack-a-Mole style where one might not expect, is The Tragedy of the Commons. As capital continues to overwhelm labor in production, the greater the proportion of production depends on mass consumption, if capital is to earn a return. That problem, starkly put, is why corporations are sitting on trillions of idle dollars, which dollars are auctioned into "risk-free" Treasuries. The result is cratered interest rates. The result is further concentration of income and wealth. The result is slower (or, negative) growth in aggregate demand. As to this last, one need only search the innterTubes to find weeping and wailing by capitalists that there just isn't demand anymore, "and we just don't know why!!". My my.

So, today's news brings us the the story of California and solar. Rather than offer quote after quote, just go read it.

The main point of the article is simple: social/public goods are difficult to provide. Allow unfettered private monopoly, one gets little to no growth and wide-spread hardship. Install either direct government provision or regulated private monopoly, and one has to juggle and balance the need to provide some level of monetary return on the capital infrastructure against tech innovation and consumer protection. This former, inevitably, means supporting inefficiency of production for what might be far longer than the technical worth of said infrastructure. It was this friction which led to the breakup of Ma Bell; the idea/theory was that competition would drive up innovation and down costs. What actually happened is we got effectively private unregulated monopoly. Now, one might argue that Ma Bell would never have implemented cell phones. Yet nearly every other country has public telecom and iPhones, so I doubt that.

Why this is relevant to the quant cabal:
But some ratepayer advocates say that linking solar bill credits to retail rates is the wrong strategy.

"The changes are so significant and unknowable that right now it's impossible for a solar customer to look at that equation and have any sense of what they're likely to save on their bill over time," said Matthew Freedman, a lawyer at the Utility Reform Network, which works on behalf of California residential customers.

Mr. Holtmann said he felt misled.

He installed his panels "with the understanding that the rules were going to be the rules," he said. "And then they changed the rules."
[my emphasis]

If you're in the business of modelling electric use, infrastructure, innovation, and so on, you're just as hobbled as Mr. Holtman. Unless, of course, you're the one who can change the rules to your benefit.

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