Grid growth and wealth

A recent article about the impact of electric grid power expansion in India and Africa peaked my interest and so reviewed some of the papers on the topic spanning decades. While I obviously can’t declare definite conclusions they seem to point to problems with base assumptions made by advocates of broad electrification.

The blog post was a quick review of a couple of recent studies discussing the expansion of electric power to villagers in rural India and Kenya. The studies are very different looking for different things. But they both show that the expected economic boost from the build out of the electrical power grid has not arrived, at least not yet, and some of the data indicates a net negative impact.

In general it appears that the cost of the service is too high to pay off for these poor farmers/villagers is modest at best and in some ways is a net negative.

This is contrary the experience in places and times, most specifically the US where rural electrification was a vast boost to the economy.

The situation needs study but the thing that comes to my mind is that the served populace needs a certain amount of wealth to make use of electricity.  On its own electricity does nothing, its what it enables that is the important thing.  Many of the areas that have already electrified were both relatively wealthy and had existing in service infrastructure that could be made more productive powered by electricity rather than the prior human, animal, steam or wind power.

Today the urge is to spread the grid out into the poorest rural areas, these are subsistence farmers not commercial farmers and these people have little or no infrastructure to make more productive. Not to say that they cannot move up the chain with time but the move from subsistence to commercial farming is non trivial. Transportation infrastructure and marketing/sales infrastructure are critical while cell phones are a huge enabler the rest of the picture is still fuzzy at best.

Also one has to wonder if this uplift isn’t facing a very stiff counter wind from the global economy. It is very cheap to move products in bulk across the major transport networks it could be that farmers, selling a local staple product will find it very hard to compete even if the distance to market is relatively short.

Though this is only one data point, it seems to point out that implementation of small scale solar/battery systems for light and telecom are the most important stepping stone for these subsistence farming communities.  That the improvement of transportation infrastructure might be of value before a major build out of electrical grids.

Limitations of Pay Pal and how it’s side stepping them

I’ve used PayPal for several years now on my iDevices and PC’s, mostly for paying a few monthly subscriptions and moving money between bank and credit union. It also enables me to pay for my minor excesses out of my ‘monthly money’ rather than the family general account. I have bought a couple of big-ticket ‘toy’ items using the credit account and then paying back over a few months, or better saving up then using PP to buy the lusted after item over the net. I think PP is a useful service and I trust it more than I do big bank credit card services though that’s a little player vs. mongo player preference rather than real in-depth analysis.

Pay Pals weakness has been the network effect. In general the more members any network has the more useful it is. While PP is pretty widely spread these days it’s not getting bigger quickly enough and I have continued to use other methods of paying for most things.

PP has solved at least part of this growth problem by moving into the credit card world. Establishing a PayPal Master card in place of its own credit account. This enables users to pay through the immense existing credit card infrastructure but use the PP ‘back office.’

In one sense it’s a bit sad that PP had to just become another credit card. But they do provide a lot of other services and a way to manage and move your money around in the banking system.

The truth is always so much more interesting than the crap I learned in school

The Truth About the “Robber Barons”
Mises Daily: Saturday, September 23, 2006 by Thomas J. DiLorenzo
It’s long but interesting, after reading it think about what has been going on around us for decades, longer really, since what is discussed in this fascinating piece has only gotten worse since the long dead protagonists passed from the stage:

The American economy has always included a mix of market and political entrepreneurs — self-made men and women as well as political connivers and manipulators. And sometimes, people who have achieved success as market entrepreneurs in one period of their lives later become political entrepreneurs. But the distinction between the two is critical to make, for market entrepreneurship is a hallmark of genuine capitalism, whereas political entrepreneurship is not — it is neomercantilism.

In some cases, of course, the entrepreneurs commonly labeled “robber barons” did indeed profit by exploiting American customers, but these were not market entrepreneurs. For example, Leland Stanford, a former governor and US senator from California, used his political connections to have the state pass laws prohibiting competition for his Central Pacific railroad,[1] and he and his business partners profited from this monopoly scheme. Unfortunately, the resentment that this naturally generated among the public was unfairly directed at other entrepreneurs who succeeded in the railroad industry without political interference that tilted the playing field in their direction. Thanks to historians who fail to (or refuse to) make this crucial distinction, many Americans have an inaccurate view of American capitalism.

As a header for the article, DiLorenzo has this quote:

Free-market capitalism is a network of free and voluntary exchanges in which producers work, produce, and exchange their products for the products of others through prices voluntarily arrived at. State capitalism consists of one or more groups making use of the coercive apparatus of the government… for themselves by expropriating the production of others by force and violence.
— Murray N. Rothbard, The Logic of Action (1997)

So the taxonomy here is:

  1. Free market capitalism
  2. Political ( crony) capitalism
  3. State capitalism

But the whole story is much more complex than this article outlines, since all of the actors in the dance, (‘good’ guys and ‘bad’) were acting out of self interest, enlightened self interest, altruistic self interest and more darkly unconscious self interest, based on very, ( by today’s standards, very, very) poor information and worse theories of cause and effect. It is all but certain they were trying to do the best they could for the audience they cared about (sometimes but rarely, just themselves.) Even monsters think they are doing the right thing (sometimes via massive self delusion admittedly) whatever outside observers perceive.

URK! The sound made after the breath has been knocked out of you

Both me and the American economy. And they still don’t get that it’s all about the intersection of bad and vastly too much regulation
This and more at PJMEDIA: Stephen Green, The Bistromath economy
My emphasis

2.3 million — number of Americans “marginally attached” to the labor force.

-720,000 — change in civilian labor force in October.

815,000 — number of discouraged workers in October.

62.8% — labor force participation rate.

-0.4% — change since September.

13.8% — underemployment rate (U-6) in October.

More bistromathic mathematics:

+0.2% — change in U-6 since September.

14.2% — U-6 in January, 2009.

-0.4% — U-6 improvement after 52 months of economic recovery.

??? — actual unemployment rate, following revelations of data manipulation by Census Bureau during lead-up to 2012 election.

7949.09 — DJIA, January 20, 2009

16,064.77 — DJIA November 22, 2013

200% — increase of DJIA since January 20, 2009.

$22.01 — U.S. average hourly wage, January, 2009.

$24.10 — U.S. average hourly wage, October, 2013.

9% — increase in U.S. average hourly wage since January, 2009 (not adjusted for inflation).

10.61% — cumulative inflation since January, 2009.

< 0% — increase in average hourly wage since January, 2009

2.5% — second quarter U.S. GDP growth, annualized.

2.0% — third quarter U.S. GDP growth, annualized.

2.0% — fourth quarter US GDP growth, projected.

< 3.0% — 2014 U.S. GDP growth, projected.

1.67% — average U.S. GDP growth under George W. Bush, including 9/11 and 2008 financial meltdown.

Just over 1% — average U.S. GDP growth under Barack H. Obama, including stimulus and recovery.

$1,020,000,000,000 — stimulus injected into U.S. economy by Federal Reserve in 2013 (planned).

$313,695,000,000 — U.S. GDP growth in 2013 in dollars (projected).

3.25:1 — ratio of Fed stimulus dollars to each new dollar of economic growth.

62% — percentage increase in U.S. debt since January 20, 2009.

56% — increase in U.S. debt after eight years of GW Bush

38 — months remaining in Obama administration.

Well…it seems obvious that Commercial Defense Firm is a 21st century oxymoron

20131109-163511.jpgBAE Shipbuilding Fiasco Has Lessons
Source:; published Nov. 7, 2013 By Giovanni de Briganti
A vastly different and nuanced take on the ‘closure’ from Sir Humphrey:

The death of UK shipbuilding has been greatly over exaggerated
The news in the UK is dominated today by the announcements of mass redundancies in the BAE shipbuilding business, with almost 2000 jobs being lost at three sites in Portsmouth and Scotland. The news is very sad, particularly for those families involved, but offset slightly by the news of a planned order of three new OPVs for the Royal Navy, ostensibly to replace the current River class vessels. The news has been seen as highly damaging to the UK shipbuilding industry, and resulted in headlines claiming the end of 500 years shipbuilding as we know it in Portsmouth (in fact utter nonsense as Portsmouth has gone many decades without building warships other than HMS CLYDE – it had only recently regained construction of blocks for the Type 45 project) and leading to unpleasant suggestions about it being a sop to the Scots ahead of the referendum.