To add insult to injury, this is from the April 2019 Stanford law review:
"Almost half of all the coal produced in the United States is mined by companies that have recently gone bankrupt. This Article explains how those bankruptcy proceedings have undermined federal environmental and labor laws. In particular, coal companies have used the Bankruptcy Code to evade congressionally imposed liabilities requiring that they pay lifetime health benefits to coal miners and restore land degraded by surface mining. Using financial information reported in filings to the Securities and Exchange Commission and in the companies’ reorganization agreements, we show that between 2012 and 2017, four of the largest coal companies in the United States succeeded in shedding almost $5.2 billion of environmental and retiree liabilities."
If a company can escape their (financial, environmental, social) responsibilities by filing for bankruptcy before they have to pay out, they should be paying it forward.
In my country, pension funds are always separate companies from the employers; they have to deposit part of your wage into the pension fund, after which they can no longer touch it (because well, it's your money).
Of course, whether the pension companies handle it appropriately is another matter.
Pension funds are generally defined benefit, as opposed to defined contribution. This means that they guarantee a retirement benefit. The problem with that is the companies often invest a portion assuming an unrealistic growth rate. The problem is worse when you consider that the effects of the underlying under-investment won't be felt until the current workers retire and start drawing on their funds. In other words, the people making the investment decisions today likely won't be around for the reckoning. This leads to a situation where a business today could be held hostage by employees from 30 years ago forcing current employees to suffer, prior employees to have their benefits cut and newer companies without these legacy costs to benefit.
Defined contribution means the employer puts away a certain defined amount for every employee and the employee is entitled to that. This removes the risk of mismanagement of funds and gives employees responsibility to manage their own investments. An example is a 401k account. Most private businesses in the US switched over to defined contribution as its more sustainable and predictable. As an employee I also prefer defined contribution since my retirement is no longer dependent on the health of an employer a few decades from now.
> This leads to a situation where a business today could be held hostage by employees from 30 years ago forcing current employees to suffer
This is a very loaded characterization. You're describing pension beneficiaries as using some kind of leverage ("held hostage") to extract resources that current employees might have a better claim to ("forcing [them] to suffer").
But defined-benefit pensions are a form of deferred compensation. Those employees from 30 years ago accepted lower wages in exchange for future pension payments, and the company received something of value (employee labor) on partial credit. So pension beneficiaries aren't extracting rents from the company. They're creditors of the company, literally. There's nothing untoward about them expecting payment, and if the company has mismanaged funds, they're not the ones to bear that risk. (If the company flourishes and increases in value, pension payments don't increase. If retirees don't benefit from the upside, they shouldn't bear the downside risk, either, which is just another way of saying that pension obligations represent a debt, not any kind of equity.)
> Those employees from 30 years ago accepted lower wages in exchange for future pension payments, and the company received something of value (employee labor) on partial credit
That may be true, but that doesn't mean that another competitor without those legacy costs can come in and better compete, unless the benefit from being able to pay less for the workers from long ago is big enough to create a sustainable competitive advantage. I would also note that the term is likely much longer than many debt agreements (most debt is 5-10 years) and is not subject to the proper credit risk considerations as normal corporate debt.
> There's nothing untoward about them expecting payment, and if the company has mismanaged funds, they're not the ones to bear that risk
Employees are the ones that bear the risk as a company can always renegotiate or go out of business. I'm not sure where pension liabilities fall in bankruptcy, but I certainly wouldn't want to bet my retirement savings on my current employer's health 30 years from now.
> Those employees from 30 years ago accepted lower wages in exchange for future pension payments
That might or might not be true. You can pay everybody well now and give them a pension, leaving the next generation to figure out how to pay out the pension that doesn't have any money in it. There are laws in place that try to prevent this.
> But defined-benefit pensions are a form of deferred compensation.
Defined-benefit pensions are basically a scam. They promise you a lot of "guaranteed" money with hidden risks (what if the investment returns are lower than expected? what if the company's business fails?) and then the managers who made that deal are long gone by the time the workers find out whether the gamble that was quietly made with their retirement money actually paid out or not.
It's possible to structure them as an annuity from a financial institution that actually has the assets to back them up, but then the lower risk would be priced in, which reduces the ROI so much that it makes them highly unattractive compared to investment vehicles with greater variability and correspondingly higher returns.
People only like them because they're perceived as guaranteed even though they carry significant risk. It feels a lot like the mortgage crisis in that way -- people rating high risk mortgages as AAA because they expect to be long gone by the time the dust settles.
The DB deficit is mostly down to the accounting rules used I have had briefings (off the record Chattem house rules) for one of the UK's Largest DB schemes - One that recently sacked one of the Big 4 and now runs self managed.
You do wonder if the Accounting profession deliberately altered the rules around DB pensions to allow employers to shut them down.
Basically in the UK if the worst case scenarios that DB pensions have to match came true you would be talking about a major break down in civil society and making sure you had a shotgun to defend your stash of tinned goods.
The accounting rules were necessary to prevent understatement of liabilities, because as the previous poster wrote, today’s decision makers won’t be around when the problem happens 30 to 60 years into the future.
Employers shut them down because insuring such risks decades into the future is too costly, not to mention the inability to reliably predict events that far into the future.
Ah yes but are the accounting rules fit for purpose or where the accountants lent on to adjust the rules to deliberately make the alleged deficit bigger to give the employers an excuse.
If you think I am joking look at the recent audit scandals in the UK by the Big 4
If anything it was historically the opposite. You had pension funds assuming guaranteed 8% returns. Compare this to actual returns on low-risk investments like treasury bills.
You could historically get close to their targets with higher risk investments (although even then they were optimistic), but that involves the risk of losing a significant amount of the principal. Which doesn't mesh with providing a guaranteed payout to retirees. But if you stick to lower risk investments, the amount of the shortfall is enormous.
So it was historically fraud. They guaranteed a payout and then did things that may have resulted in them not having the money. Once you do the accounting accurately and restrict yourself to investments that can't result in being unable to make the promised payouts, it turns out the cost of a guaranteed payout is large.
> Why do you take what the accounting "profession" and employers /politicians at 100% face value - you don't see they may have an agenda here.
You don't have to trust them at all, you can do the math for yourself.
> and you are ignoring the fact that DB schemes are immortal or very very long lived.
That's the fraud. Nothing actually lasts forever. When you use today's payments to pay yesterday's benefits, you have nothing to pay what you owe to today's workers. If the company's business ever fails, the workers lose their retirement because the money they paid in was already paid out to their predecessors.
On top of that, companies with huge unfunded pension liabilities have a competitive disadvantage against newer companies without them, which makes it more likely those companies will fail.
And the same is true of governments. A state that promises retirees half its GDP is going to have low economic growth, low population growth because young people can't afford to start a family there, and reduced immigration because people won't want to to move to a place where they pay half their income in taxes to fund a retirement program that will be bankrupt by the time it's their turn to collect it.
My taxes going up because the government is severely underfunded and is sending 1 out of every 3 dollars to pay for labor from 30 years ago instead of funding schools, infrastructure, and quality of life for my kids.
It’s pretty well established that if you give a small group of people control of a large pot of money and the ability to fudge numbers decades into the future, it’s going to be corrupted and the future is going to end up paying.
Unless, of course, it's the US Postal Service that's offering the pension, in which case HNers jump out of the woodwork to give elaborate justifications of why pre-funding pensions doesn't make sense because "lol it doesn't pay out until later, what's the problem?"
The example you're looking for is insurance, where it's an obvious problem. You can't just open an insurance company, take people's premium payments, and then go broke when there's a claim.
But for other companies, normal limited liability bankruptcy is the default solution. Nobody thought coal companies would be a special risk in the sense of having liabilities way after their income. It's like if you invent an ice cream that turns out to give people cancer in 20 years, there's no recourse beyond what money the company has at that time.
I think it isn't a case of "nobody knew" so much as "everybody was in deep denial". Black lung was long known along with the effects of poor air as not good for your health.
I have noticed a chain of rationalization cropping up a lot with preventable human health crises - often on a generational time scale.
The sequence seems to be similiar to an ironic reshuffled subsection of stages of grief.
1. Bargining: "Yeah it is bad but is better than the alternative." (It makes money/keeps us from freezing to death.)
2. Acceptance: "It is a neccessity now." (Most of our industrial and personal exonomy is dependent on it.)
3. Denial: "It can't be harmful!"
4. Anger: "How could we know that it was bad?"
Reminds me of: climate change, American government, inequality & the flaws in capitalist systems, using free internet services (fb, google), sedentary lifestyle and poor (processed food and excessive refined sugar) diet.
Yeah agreed. Not clear what the solution is though. It's a bit blunt to just not allow limited liability, which is useful for a lot of things. But then what do you do instead?
1) People must be held responsible for their actions no matter if it's in their free time or at work. You do it, you are responsible for it.
2) Those that give unlawful tasks to others as their boss must personally be held responsible no matter whether the task actually got implemented, or not.
3) The investors of avtivities must personally be held responsible for the activities they fund. It's their responsibility to know what they are funding.
Simple solution, provide a bond as condition to start.
But it won't get implemented, why? It would be in many billions because the bond needs to cover clean up costs, etc. Companies want this risk to be borne by government and indirectly, the population/environment.
If you start out you won't yet have destroyed a lot of land and you won't have many miners. Just require a fixed amount of money as a bond for every ton of coal produced. This could also cover CO2.
The cost of cleanup is in no way linear with the amount of coal being produced; that solution would be complicated and impractical.
A better approach is to make the mine operator come up with some sort of remediation plan as part of the approvals process and then insist that they follow it, backed with the threat of massive fines. Se a standard so that remediation has to be ongoing or commence before the economic phase of extraction is over (to prevent bankruptcy from being a rational out).
That does front-load the costs and so push out smaller operators from starting mines; but that is pretty much inevitable when tightening environmental standards. If the goal is to force a company to do something that isn't economically rational, a determined regulator is a reasonable way.
Not really. When coal wasn’t getting crushed by natural gas, cleanup costs for seem mines were easily covered (assuming co2 not priced in as is standard right now).
This is why limited liability is a terrible idea, just another way to privatize the gains and socialize the losses.
When you buy a stake in a corporation(especially one that comes with voting rights), and the corporation goes on to cause damages to life, property, the environment etc, you should be held personally liable in proportion with your share(or voting share).
I can see the argument for limited liability in case of debts: the issuer of the debt has the opportunity to do due diligence and take the risk of bankruptcy into account. But in the case of damages, I don't see how limited liability can ever be justified.
We've had limited liability for centuries, and it's completely critical for getting people to invest in businesses. Without it, nobody dares open anything larger than a lemonade stand, unless they're already extremely wealthy.
For a handful of organisations, yes - though the adoption of limited liability structures en masse dates only to the late 19th Century, at least in England.
To put it another way, we managed to run the industrial revolution with pervasive unlimited liability, so it seems likely that 'completely critical' is substantively overstating it.
We can split hairs about what adjective applies, but the point is that limited liability is a fantastic idea and a big positive in letting people get involved in a business. Limited liability makes it substantially easier for small-time investors to get involved in economic windfalls.
We should be striving to equalise access by both the poor and the wealthy to making money. Limited liability makes it safe for little investors (the people who can't afford a personal lawyer and accountant) to invest in a company.
Take away the limits, and it is no longer safe for small investors to invest in large companies. A big scandal and small shareholders could be wiped out. People who, realistically, had no actual control over the corporation and who were just trying to tap in to the wealth creation engines of the broader economy.
Removing limited liability provisions (1) doesn't target the executives, who are decision makers and (2) tips the field towards an "only the wealthy can afford the risk of investing in stock" equilibrium - even if just a little bit.
LLC isn't a serious mechanism to "privatise gains, socialise losses". That is achieved when the US government sweeps in and gives large cash infusions to incompetent bankers so they can pretend that bankruptcy is a mysterious phenomenon that threatens consumers rather than being a realisation of the incredible damage that they are doing with their own bad decisions. You can easily have both well remediated minesites and LLC laws in the same story. Just beef the regulation up a little.
1. $200 is what it costs if you do it yourself, $1000 with the help of an attorney and accountant.
2. What's a lot? Losing even a $100K house is devastating. Having a failed business's creditors take away everything because a customer fails to pay a bill in a timely manner and causes a cascade of failed bill payments from the business is crazy... which is the main reason you incorporate - routine business risks are... riskier than most people's personal life.
Limited liability is a tool for everyone and I would argue matters more the less wealthy you are. I say that having started four businesses, with about a month worth of operating cash... Started three part time on the side, and without the corporation self-employment tax alone would have crushed the business, let alone a lawsuit against my family because of a routine business issue. It also helps in reverse - a financial problem a partner in a small business has generally is not able to reach through the business to take assets from the company. It might change who the owners are, but it doesn not allow people to reach through to the business.
> Having a failed business's creditors take away everything because a customer fails to pay a bill in a timely manner and causes a cascade of failed bill payments from the business is crazy... which is the main reason you incorporate - routine business risks are... riskier than most people's personal life.
Bills and other debts can be subject to limited liability when the other party explicitly agrees to it.
My point was that damages to 3rd parties who didn't agree to the conditions of limited liability, like people affected by hazardous chemicals(see https://en.wikipedia.org/wiki/Bhopal_disaster), unsound structures, unsafe workplaces, environmental damage and so on should not be denied restitution because of limited liability. Neither should the taxpayers pick up the tab in such cases.
Being poor — or indeed normal —means not having $200 to spare on making yourself resistant to bankruptcy. Tech workers like us are much richer than most: I started on my country’s national lifetime average salary, and most recruiters now expect me to ask for double the local national lifetime average.
Plenty of normal people incorporate... It isn't about resistance to bankruptcy... It is about avoiding a whole swath of life altering problems that a corporation prevents.
It is not true for everywhere in the world: often in lower income countries it is often far less expensive to incorporate. The legal protections vary, too.
The inability to keep assets hidden ("safe") means an LLC would be more valuable for a non-wealthy person. While a wealthy person squirrels away their assets somewhere, a poorer person needs LLC protection exactly so their personal assets don't get taken away.
To the last point, losing everything, even if it's less, would be more devastating than a richer person losing half of what they have in a judgement. So a poor person needs a LLC to avoid the calamity of everything being taken.
Before LLCs it was only established families or folks with very wealthy patrons/backers who started companies. Now millions of people from every financial status do so. The proof of the pudding is in the eating.
You're assuming that if the law changed the wealthy would sit there and accept the liability. They wouldn't. Without any expertise whatsoever I can imagine a massive pools of capital lending to companies at extortionate rates (~13%, or whatever predicted profits are + 5%), and the owners of the companies would be shell entities or some patsy to take the fall. That way the profits could be harvested across ownership boundaries and the people with the capital would be protected as lenders not owners.
The people with resources would set up ad-hoc schemes like that would limit their liability somehow, slipping loopholes in to the legal system. The small players wouldn't have the resources to play that sort of game. The more there is to lose the more effort would be diverted into protecting it.
So what do you think happened BEFORE limited liability companies existed? And what do you think happens in countries that don't have limited liability companies? And what about all the people who create businesses without creating a limited liability company?
As someone else says, partnership structures. These have a very limited ability to raise external capital.
I'm slightly surprised to have to argue on a site built on providing venture capital as equity to startups that also issue equity to employees that exposing all those investors to the risk of losing their homes as a result of action by those they have only a very limited control over is a bad idea.
> what do you think happens in countries that don't have limited liability companies?
There is an excellent book on this, The Other Path by the economist Hernando de Soto, on extra-legal systems in Peru.
And in Third World countries where you don't have good formal legal systems, the environmentally destructive exploitation projects still happen, with the complicity of the political structure - and often substantial amounts of extra-legal violence. At least in the US you can sue Cloud Peak Energy without getting your legs broken.
It's also worth looking at what happened to the Lloyds "Names", who were supposed to be unlimited-liability reinsurers.
None of this is to say that coal companies should be allowed to commit environmental damage and get away with it, but it does mean that the system needs to be better in preventing this in the first place.
A lot of countries don’t let their professionals incorporate. Usually for the reason that victims of professionals shouldn’t end up paying the costs of their victimization.
It’s also why you’ll see professionals put their home in their spouse’s name, just in case.
People without connections got made examples either for actual misconduct or as a pretense for felony interference with a business model, the connected got away with literal murder, but no matter how harsh the punishment didn't deter the desperate masses of aspirants from trying to make it big fast through dodgy means. See China and CEO misconduct for an example.
People can still get insurance that allow the risk to be priced in. Without such a mechanism, the risk is completely ignored, and society has to bear the cost when things go wrong. If taking this risk into account slows down investment, maybe we don't need such reckless investment that puts people's health, lives and the very future of the species at risk.
Its funny that every time when poor people ask for something like student debt relief, the familiar old sermons about personal responsibility are trotted out. But when the rich are asked to be held to the same standards, we are told that it is just not possible, society itself would collapse and so on.
In the context of this discussion, I read it as more of an argument that requiring a cleanup cost bond or some mandatory specialist insurance before mining operations can begin is a better solution than removing unlimited liability.
The Islamic world operated on partnerships rather than corporations up until quite recently. Some important parts of society (GPs, law firms, auditors until a few years ago) still do.
Limited liability is crucial to your pension savings. Without that, you would either have to have all your savings in assets that cannot lose value, or you would risk having all of your savings wiped out by losses in any single asset. Considering that, do you still think it's a terrible idea?
Yes. You can get your investments insured, so that the risk is priced in. With limited liability, it is a viable strategy to invest in things that have a likelihood of a mild reward, but a risk of catastrophic failure that hurts and damages a large number of people(the proverbial pennies in front of a steamroller). And it is society that bears the costs for such failures. However, insurance for such a project would be very expensive or impossible to get.
Also, with pension funds, you generally don't have the power to vote. In the case of an uninsured pension-like fund, I prefer it that the fund manager/whoever holds the voting power be the one that is primarily held accountable. If institution managing the fund is wiped out and the liability still remains, then we can move on to the the shareholders without voting rights.
You're suggesting that insurers would provide limited liability without having having a stop-loss mechanism themselves.
My guess is that insurers would look for ways to make their risk assessable and stop the potential losses by insuring you only against assessable risks. They'd insure you against a list of types of events, and nuclear war, force majeure, Nick Leeson and Knight Capital wouldn't be on the list.
Society does provide limited liability, without having a stop loss mechanism. You are defending a system where the cost of catastrophe falls on everybody but the ones who encouraged the dangerous behaviour in the first place.
Why not both? The management acts on behalf of the shareholders. If they break the law, go after the officers with criminal charges, and make the shareholders liable financially. It'll make management less short-term/risk-loving and shareholders will pick their management much more carefully.
> go after the officers with criminal charges, and make the shareholders liable financially
Even if the officers serve a prison term and forfeit all personal fortune, companies will still put them on some comfortable position (pre-bribing other officers as a side effect) after they get out.
Easier to just restrict limited liability to enterprises that operate as worker cooperatives or commons trusts. If investors want to limit their liability, that should mean giving other stakeholders the defining voice in corporate governance.
Companies shouldn't be allowed to offer pensions. They also should be forced to fund government mandated liabilities.
Companies don't have a good track record of lasting more than 60 years. It's only a matter of time before they go bankrupt. And when bankruptcy is a way of shedding your pension obligations, they'll go out of their way to go bankrupt to shed it.
Unlike government entities, private companies are legally obligated to keep pensions fully funded at all times. And they're also required to pay a fee into a federal agency designed to cover the costs of the federal government bailing-out failed pension funds.
There are ways that companies can and do game the system. For example, during a merger the company might claim that the combined pension fund is overfunded and then stop making payments until the supposed net liability returns to 0. The "excess" funds often find their way into executives' pockets as bonuses, compensation for the several quarters where the company's ledger miraculously showed unexpected profits.
There are problems that need to be resolved, but they're resolvable. Private pensions can work, and have worked. Don't believe the rhetoric about pensions--it's largely driven by executives trying to raid pension funds. Executives don't like them because as compared to 401(k)s the ratio of executive compensation to worker compensation is lower. There are federal rules that require workers receive the same benefits as executives, and for various reasons executives will come out ahead with 401(k) packages.
The book Retirement Heist by then WSJ investigative journalist Ellen Schultz explains all the gory details.
Municipal pensions are irreparably broken, though, precisely because the federal rules regarding funding don't apply to them.
Most private companies don't offer pensions anymore (for new employees) because companies don't like them. One reason is that pensions incur risk to the employer, while a 401k shifts the risk to the employee.
Until the cash is in the employee’s accounts, the employee is still at risk of not getting paid due to bad investment returns or the employer going under. And it’s not like the pension fund is doing any better than any other index fund the employee can invest in.
Pension plans may not be able to get better returns, but they can specifically balance their assets and liabilities better by picking specific investments and/or buying/operating private companies.
An index fund will underdiversify by only selecting public companies, and over-represent companies with short-term interests (the total opposite of a pension plan!).
The underdiversification or index funds is a particular issue ex-US where stock markets only represent a few sectors.
Pension plans can sure screw up, but they can also be unbeatable.
They all have short term interests, since the people doing the investing aren’t going to be around for the whole ride. In theory, defined benefit pensions are great, but in practice I haven’t seen any evidence that they have sufficiently superior performance to make up for the possibilities of bad investments, corruption, etc.
That is atypical from what I see in the US. In the US, if the pension fund is doing well, that means the politicians offer the government employees unions better benefits, and so all the union members vote for them and since not enough other taxpayers vote against them, we just end up with inflated benefits.
Pensions are a great thing if you work for the same company from 23 (right out of collage) until you retire at 65. How many reading this will work at the same company for 42 years though? For many the company you worked for is no more, others were laid off through no fault of their own. Most of the rest could stay at that first company in theory but there was a better opportunity that you had to not take (even if it turns out worse in hindsight). That doesn't leave very many to make it to retirement working for one company.
Then there is inflation. $5000/month for retirement sounds good now, but will it be when you actually get to retirement?
I wouldn't mind a defined pension. It's easier to plan for and also I think more efficient. With a 401k you have to save up a boatload of money just in case. If you live too long you may run out of money, if you don't live long, then you have a lot of money left. So it seems to me that it would be better to average it out over a lot of people. Pretty much the same as with health insurance where one people will need more, some people will need less so it's better to average out out over a large number of people.
The problem with opt-in annuities is that the seller charges a boatload to account for the risk of your longevity. I guess you would advise buying an annuity and stock in the annuity seller?
My chief complaint about semi-forced annuity purchases is that those that opt-out and retire without savings get back-stopped by the state anyway.
I tell everyone to figure out how much they need to live and put just enough in an annuity to give you that (rent, heat, food, insurance). The rest of your 401k (if anything!) is fun money.
Don't forget that you should have long term care insurance that covers a good nursing home (get this as soon as you retire when it is still cheap because odds are you will never need it).
With this plan you can outlive your savings and still have an okay life.
Just because something is regulated doesn’t mean it’s safe and definitely doesn’t mean it’s guaranteed. For example, US social security funds are solvent until 2035 according to our own government accounting[1].
It's not like it will disappear after 2035. Some adjustments have to be made like probably raising the retirement age but that doesn't mean that the system doesn't work.
Public pensions like the ones in Canada would be nice. From both the worker and government perspectives, they provide a lot of stability and can be planned for. Of course, it won't happen in the USA, I think, sounds too socialist for many people on the right.
What public pensions? Canada has the same setup as the US, and in fact, the US Social Security is a larger program per capita than Canada’s (I.e. high payouts).
We have basically three programs to provide income to retirees:
1) Canada Pension Plan, a worker-funded defined benefit pension managed by the government via an arms-length investment board.
2) Old Age Security, a guaranteed income program for everyone 65 and older.
3) Registered Retirement Savings Plan, an income tax sheltering program where you can contribute up to 18% of your income into registered accounts and have the contributions deducted from your taxable income. This gets drawn down during retirement for income.
Has it ever occurred to you that some people think complaining about the existence of rich people is not an issue that needs to be “solved” by risking the destruction of an economy that encourages innovation?
Ya, the same way Medicare and SS ruined it. What if, instead, security nets amplified risk taking given American culture? I’m told that New Zealand has a huge extreme sport industry because of its generous medical system.
If we had strong single-payer, we would see a 100 fold increase in startups. And these startups would self funded and creatively bootstrapped. Without the burden and complexity of securing private health insurance, anyone with a couple months rent saved up could try starting a business. We'd probably even see old people do it.
Speaking of which, I'd love to see the temporal evolution of a histogram of ages of founders of all the IPOs in a given year. In a good economy, I bet it would be a fixed density across the spectrum, in an ok economy it might be bimodal and in a poor economy it would be a single peak.
> If we had strong single-payer, we would see a 100 fold increase in startups. And these startups would self funded and creatively bootstrapped. Without the burden and complexity of securing private health insurance, anyone with a couple months rent saved up could try starting a business. We'd probably even see old people do it.
This is a good thought! You've identified a factor holding people back and thought about what might happen if it was removed.
Yet, is it perhaps possible that there could be more complexity to this? Several countried with strong single-payer health care systems spring to mind. France and Germany and the UK are not generally regarded as having 100x the startups as the US. Self-funding and creative bootstrapping has not replaced VCs.
It could be worth considering the possibility that access to health care might not be the thing preventing endless fields of startups. Perhaps there could be some other factors at work?
Single-payer is a policy whose time has come in the US. But it might not be a silver bullet for conjuring startups ex nihilo.
> Several countried with strong single-payer health care systems spring to mind. France and Germany and the UK are not generally regarded as having 100x the startups as the US.
The consensus is that it's too hard to fire in those countries. (Look at the lawsuit that bankrupted Mandriva for an especially pointed example). I'm not aware of any country that combines socialized healthcare with US-style at-will employment, but perhaps that's the ideal combination - you can lose your job at any time, but losing your job does not mean losing access to medicine.
> Self-funding and creative bootstrapping has not replaced VCs.
It sort of has. VCs have shown very poor returns and a lot of companies have bypassed them.
> Single-payer is a policy whose time has come in the US. But it might not be a silver bullet for conjuring startups ex nihilo.
There's a noticeable spike in people starting businesses once they reach medicaid eligibility age (50 I think?) So while it won't fix everything it should make a significant difference.
> The consensus is that it's too hard to fire in those countries.
I've heard the same. I know it's true that it's very hard to fire in many places. At the same time, it might be worth considering that this could be more silver bullet thinking.
It is perhaps more likely that instead of there being one thing holding back an endless wave of startups in each country, there is instead a series of interacting forces producing the same effect.
Doing so with the expectation that one change will permanently 100x something might be considered by some to be slightly less than maximally reasonable.
France and Germany have different cultures as well. Single payer isn’t the difference. We waste a lot of time and money in America on a broken system. That time and money could go elsewhere while encouraging more risk-taking.
I also wonder about non-medical insurance costs and how much that is propped up by high medical costs. Would my business’s general liability or workers comp be half the price if we had single payer? A lot less? After all, most injury claims are for cost recovery.
> Without the burden and complexity of securing private health insurance, anyone with a couple months rent saved up could try starting a business.
How expensive is private health insurance in the US? I've seen numbers as low as $6k a year, but from your post it sounds more like $20k a year.
I doubt that it would massively increase the amount of startups. We have all that (and more) in Germany, and you don't see companies popping up everywhere, and the ones that are founded are mostly copy cats.
At a minimum, for the healthiest young males, health insurance premiums are at least $300 per month with a $3.5k deductible. Older people are in the $600 or more range per month.
I would budget $500 per person per month with a $7.5k deductible for a family.
That’s two separate factors. Different insurance plans have different contracted providers, and different employers subsidize different portions of their employee’s health insurance premiums. Some employers might subsidize 50%, some 80%, some $100, etc.
I was referring to the cost of insuring someone, regardless of who is paying. I’ve compared costs on healthcare.gov to employer based options in a few states, and they’re not far off from each other unless the employer has many younger employees and few old employees.
I’m a serial entrepreneur that’s hired hundreds of people. I’m well aware of Obamacare. In fact, my wife is an insurance and benefits broker for large groups.
Actually I think you do. Compare these two systems:
European style welfare: Big government which takes care of people so companies don't have to.
American style welfare: Small government which doesn't take care of people, but lots of regulations on companies forcing them to provide welfare normally provided by government.
If someone ever figures out a class action suit to represent people living near coal plants that are suffering from (or have died from) the side effects of living in a polluted area, it's going to be pretty much game over for the coal industry. At this point they can't really claim ignorance. Bringing this up because class action suits are quite common in the US and have also caused a lot of trouble for e.g. the tobacco industry.
The case for continuing to kill people with smog is pretty weak and cleaning up remaining plants is not going to make operating them any cheaper. It's also a great argument against building more (although entirely redundant considering the economics of coal in general).
Where on the bankruptcy hierarchy of financial obligations do environmental liabilities fall? I would think they should be higher priority than shareholders and debt holders.
The old bankruptcy procedure simply halted operations and sold off the assets. The new procedure allows the company to continue operating under the direction of a judge. A judge, of course, knows nothing about running a business. Worse, it allows the people running the company to strip its assets for their personal gain.
Within the next few decades, we will see the oil majors facing a similar fate, unless they've transitioned to other energy tech.
New technology can seem impossibly expensive, but if it's on a consistent tech curve of decreasing costs, it's impossibly expensive one day and then the only option the next. There's a non-linear transition when the new tech becomes the cheaper one.
We are seeing electrical energy storage following that curve. In the right geographic locations solar and wind are far cheaper sources of energy than anything else. If hydrogen from renewable energy, or methanates hydrogen (ie natural gas made from renewable energy) becomes cheap, it will eliminate all oil extraction except for things like plastics. And without selling diesel and gasoline, will it be worth it to pull out the oil instead of synthesizing plastics?
The world is changing, and there are currently a ton of investments in natural resources that will never be extracted.
> Within the next few decades, we will see the oil majors facing a similar fate,
I'm wondering what is the consensus about this statement. AFAIK solar and wind may be cheap at the margin, in specific areas, when they are supported by coal/nuclear. But can we reasonably think they can replace fossil fuel at a large scale in a near future? I have little knowledge on this issue, but I heard reasonable experts [1,2] saying it was doubtful.
It's so weird to me that people read "Without Hot Air" and think that it is pessimistic about renewables. It's a perfect example of what I'm talking about here. It was written long ago. Read it again, and insert modern numbers, and the unbelievably expensive scenarios are starting to become the reasonable ones.
Add in other tech like HVDC, and as I said in my post, conversion of electrical energy into chemical energy storage in hydrogen or methane, and it all becomes quite feasible.
Why is coal dying over the past 5 years? Because huge government subsidies kick started fracking technology which ended up making US natural gas incredibly cheap, as the tech descended the cost curve.
Why are solar and wind the cheapest (non-dispatchable) electrons in much of the US? Because we are far enough along on the tech curve.
Why are solar+storage and wind+storage project bids for 2022 and 2023 coming in under the cost of combined cycle gas turbines? Because lithium ion batteries are transitioning to cheap from impossibly expensive, particularly as vehicle demand drives massive scale up in lithium ion battery production.
All that stuff in "without the hot air" that made it hard in the UK is coming within reach. And the UK is pretty much one of the worst possible situations for solar, one of the main legs of renewable tech, and it will still work out. Offshore deep sea wind is getting super cheap and it has much better intermittency properties, making it require even less daily storage . seasonal storage still would be great to minimize overprovisioning of generators, but how much we overprovision versus how much we store will just be a cost optimization between the relative prices.
One other thing, is that it's really really easy to get suckered into cost estimates for nuclear that are 3x lower than true costs. For example, in "Without the Hot Air" the Plan M has 45GW for £60B, based on the Finnish Olkiluoto plant:
This plant is a good example of a typical nuclear project. It was slated to be open in 2009, within the scope of HotAir's publication, but instead, it's now more than 10 years late, 3x over budget, and "expected" to open in 2020, but who knows how much that will get delayed.
The UK has tried to build a few more reactors, starting with Hinkley but also more planned. Hinkely is turning into a disaster, and for the further plans they can't even find any contractors that are willing to build nuclear anymore. It's failing from all sides, even when governments are eager to write checks.
This is endemic with all nuclear construction, and why nuclear will play nearly no role at all in mitigating climate change. Not because it's stopped by fear and public panic, but because those who try to build nuclear fail and cause massive financial losses.
If we could build nuclear like we have in the past, it wouldn't necessarily be much better. There's a survivor bias about the reactors that did get built, and for every success there's enough failure that discourages new attempts. I always hear France and South Korea cited as outliers, but South Korea's success is turning out to be a story of deception and corruption, and I've never had a chance to fully investigate France. Nuclear succeeds when the government needs to build nuclear weapons, and has massive government backing; when nuclear is on its own in the marketplace it doesn't do so well.
Meanwhile, the alternatives to nuclear are getting cheaper, faster to deploy, and can be scaled large or small. They will allow developing countries to deploy electricity without having to build massively expensive transmission grids, so it's likely that large parts of the world will leapfrog like they have with wireless cell phone technology.
and that is why I didn't go into O&G as a ChemE after graduating. The writing was on the wall with Iraq, Tesla, renewable installations, climate change, etc
I think in general no. Even high quality coal has huge amounts of impurities, and coal in general is hugely variable in quality. Even with scrubbers etc. removing ash etc. you pump all sorts of dangerous emissions as well as the huge amount of CO2.
There exist “high efficiency low emissions” (HELE) coal stations, but that moniker is only true in relation to conventional coal stations. They’re still some of the dirtiest generation we have. From the experience of the ones we have in Australia, they appear to be more unreliable in hot weather than older coal plants too - I believe probably because they would operate at higher temperature/pressures to improve efficiency.
Coal plants produce a lot of airborne radioactive compounds too -- vastly more than nuclear plants* and I don't know if scrubbers fix that problem. If they did, there would still be the problem of disposing of mixed waste from the scrubbers themselves.
Just to say it explicitly - the problem with nuclear plants is not radioactivity while they operate normally. It is the catastrophic consequences then something goes (really) wrong that are the real issue with them.
A demonstration power plant based on the Allam cycle [1] is being tested in Texas. In that process the CO2 is captured while achieving efficiencies that come close to conventional power plants. The plant in Texas burns natural gas but the Allam cycle can also run on gassified coal.
Filtration is good enough that it could technically capture everything.
Technically you could plant enough trees to capture all the CO2 as well.
The energy required to make all the filters and plant and maintain all the trees might be greater than the energy produced by coal though, and that is the issue.
The whole "plant trees" thing doesn't work too well because you'll run out of space long before you run out of hydrocarbons to dig up and burn. Plus, the trees need to stay standing; if at any point they're cut and burnt, or die and decay, then all the CO2 is released again. CO2 buried underground in the form of coal or oil is a much better long-term storage solution for CO2 than trees up on the surface. The logical thing to do would be to start burying CO2, not continue digging it up and releasing it.
No they don't. They need to be harvested and used for timber products, where the carbon can stay locked in for decades or longer. The land can then be replanted for more carbon removal.
Ideally you would use trees to make engineered wood products that replace steel and concrete, the production of which also release large amounts of CO2.
That assumes that young trees and forests have the same carbon capturing efficiencies, when I believe it’s older trees and forests that have significantly greater carbon absorbing capabilities.
I'm unfamiliar with the quality of this publication, but it reports on a study suggesting younger forests are better at carbon dioxide sequestration than older forests:
'Tropical rainforests, the revered "lungs of the planet," were once thought to take the cake when it comes to carbon sequestration. But a new study adds to a growing body of evidence that other types of forest may actually be better at sucking CO2 out of the atmosphere. Specifically it finds that young temperate forests may be more effective carbon sinks than are old rainforests.'
It is pretty silly, because why would you go to greater lengths to dig up coal when you have all this biochar you've just created at the surface that you could more easily burn to release more energy?
Nuclear waste is dumped in the Irish sea, at "regulated" amounts.
> In the United Kingdom, spent fuel is reprocessed at the Sellafield facility in Cumbria on the North West coast of England. Waste generated at the site comprises a wide range of radionuclides including radiocarbon (14C) which is disposed of in various forms including highly soluble inorganic carbon within the low level liquid radioactive effluent, via pipelines into the Irish Sea. This 14C is rapidly incorporated into the dissolved inorganic carbon (DIC) reservoir and marine calcifying organisms, e.g. molluscs, readily utilise DIC for shell formation.
“Economical” evaluation right now, in the US, is before the true cost of carbon emissions are priced in. Once/If there’s a real carbon tax the economic viability on these may change.
I personally believe that in addition to pricing carbon governments are going to have to self fund massive sequestration projects as well to avoid catastrophic change.
Which no one has demonstrated workably or economically.
The best way to sequester carbon is to turn it into coal or oil and bury it deep underground where it will remain for hundreds of millions of years.
It's insane to dig up coal and oil, burn it for energy, then spend MORE energy capturing all that CO2, converting it back into a long-term storage formfactor, and burying it again.
Much simpler to leave the coal/oil buried and get your energy from other sources.
Carbon sequestration makes way less sense than simply not digging up the carbon and burning it in the first place.
No so much coal, persey, but it's not unfeasible to capture the CO2 emitted by burning coal (or whatever) and sequester it in the ground. This should be talked about more because it enables us to use all that energy, but I suggest there might be ugly political connotations around it, much like Nuclear.
I'm not hugely familiar with it, other than I know that it's definitely something under consideration and though not yet feasible , it satisfies the query of the OP, i.e. it's 'an opportunity to make use of carbon fuels with no emissions'
I wish people who'd down vote my comment would reply if there is a factual error or misrepresentation of some kind on my part.
"The reasons that CCS is expected to cause such power price increases are several. Firstly, the increased energy requirements of capturing and compressing CO
2 significantly raises the operating costs of CCS-equipped power plants. In addition, there are added investment and capital costs. The process would increase the fuel requirement of a plant with CCS by about 25% for a coal-fired plant"
This is on top of the new reality that building solar and wind is cheaper than the cost to just operate existing coal plants [1], and therefore far cheaper than building new coal plants or retrofitting old coal plants with expensive (both CapEx and OpEx) CCS systems.
"[The C02 sequestration process steals] up to 30% of the energy produced by a coal-fired power plant, reducing its efficiency and raising its electricity price. Second-generation facilities capture and reuse waste heat, among other things, but their costs are still too high, Brickett says."
I'm aware of all of that, and that it's not feasible 'today', but:
a) Solar was 'not feasible' only 10 years ago, with more innovation and otherwise more expensive prices, it's feasible in some scenarios. There's no reason we can't innovate along other vectors. If the operating costs of solar can be reduced, surely they can with carbon fuel plants as well.
b) My point was specifically regarding burning any carbon fuel, not just coal. Natural Gas is by far the cheapest way to make electricity (depending on how you amortize Hydro I think), so 'Carbon Sequestration' would be a massive opportunity. Why would we ignore it?
c) A '30% cost increase' is actually pretty small considering most other alternatives and issues. In fact, that's good news because most energy schemes are not remotely feasible - if some clean energy scheme were only '30% away from being competitive' we'd be celebrating. If we could save the planet merely by raising electricity costs by 30% that would probably be a viable plan, globally.
d) There are places that exist 'outside the US' - like Canada, where way up north there isn't nearly as much sunlight, and the days are exceedingly short in winter, and this changes the nature of the electricity equation quite a lot and it's not actually feasible, and neither is wind in many places.
e) Carbon fuels burn in a predictable manner, which has all sorts of utility beyond the simple price. Something you can plan for is considerably more valuable than something that's inherently variable, so much so that in many cases the 'variable power' has little utility.
Particularly given there's tons of carbon fuels in the ground, I don't see why people would be against sequestration as long as it actually works.
> Particularly given there's tons of carbon fuels in the ground, I don't see why people would be against sequestration as long as it actually works.
Nobody is against anyone trying, but people are entitled to their doubts. If there were significant potential in CCS, investment dollars would respond accordingly. So far the results haven't gotten anywhere near the value proposition offered by renewables, especially in OpEx. Maybe that will change, maybe it won't.
I like how stories like this always leave out corruption and mismanagement of the mines themselves. Mines are a hot spot for upper management and owner corruption.
Historically, coal is an industry filled with -to put it lightly- labor disputes due to exploitative conditions [1][2].
Today, the industry in decline by any definition and as companies try to awl out some sort of profit they cut corners which create unsafe conditions. When accidents happen, the company will skirt responsibility to the very end (someone else has a nice link here [3]). The "Last Week Tonight" on coal from a few years ago (start at 8:39[4]) goes through some rather aggressive coal executives who don't want to fairly compensate workers. Here are a few recent coal disasters you can read about: [5,6]
Seems like this is to be expected more and more. From what I have heard coal is only cheaper when you already have the coal power plants built but when you are starting fresh renewables make more sense.
What you've heard is already outdated. It was true a couple years ago, but as solar and wind get cheaper to install and deep extraction techniques for natural gas imporve, even the unit economics of coal are uncompetitive: increasingly it costs more to get it out of the ground and ship it to the plant than it does to get the same number of kilowatt-hours from renewables or LNG, even without taking upfront capital costs into consideration.
Consider the Navajo Generating Station, which has its own dedicated rail line that leads directly to its own dedicated coal mine. That's about as good as you can possibly get, in terms of unit costs for coal, and it's still shutting down because it can't compete.
They do. They use power from the grid, of which a significant and increasing fraction is wind and solar (and hydro.)
It doesn't often make sense for factories to have their own power sources, because their power draw varies during the day, while solar and wind output also varies. So they'd need a huge amount of overcapacity to ensure that there's always enough power. The grid is the efficient way of averaging out all the supply and demand fluctuations so the supply is used as efficiently as possible.
This is why the grid has a hard time kicking Solar City homeowners off the grid: they produce dirt-cheap power at peak consumption times. Anyone who remembers the California rolling blackouts (thanks Enron, et al) understands that power consumption peaks in the mid afternoon.
At the same time, homeowners understand why they need to be on the grid: they are at work during the day and run their appliances in the early mornings and evenings when their own solar panels are less than optimal.
Thus the power purchase agreement is the deal that makes sense.
> Anyone who remembers the California rolling blackouts (thanks Enron, et al) understands that power consumption peaks in the mid afternoon.
That's not true. Power consumption tends to peak around 1900-2100, while solar energy production will peak around 1300-1500. The typical load profile is that you have a minimum load around 300 that ramps up to a peak around 900-1200, then plateaus/slowly declines until about 1600-1800, ramps up to a second, higher peak around 1900-2100, and then declines rapidly to the 300 minimum. Exact times and amounts will vary depending on time of year and the local weather and climatic concerns: A/C-heavy summer climates will see an earlier peak consumption and much less of an intra-day climb, while cold winter climates will see later peak consumption with a more prominent higher evening peak.
The extra fun thing that kicks in is that northern climates tend to have minimum solar production during the time of year when energy consumption is highest (winter!), while southern climates tend to have maximum solar production during peak energy consumption. The economics of solar power are quite different for California versus Massachusetts, let alone places such as Alaska.
A larger issue for electric companies is staying on the grid is slowly starting to be a bad deal for home owners. A minimum electric bill with zero usage covers the electric grid and administrative costs etc. It’s normally not much, but ever cheaper solar and battery systems are competing with that same electric grid.
This varies by area, but could quickly become a death spiral over much of the US.
Don't underestimate the power of politics to subvert the will of the market in order to prop an industry up long passed its expiration date. In the same way political parties are able to leverage gerrymandered districts to remain in power, entrenched industries are able to do the same to beat back more efficient, cheaper technologies.
Well, the vast majority that are plugged into the electric grid are.
The issue is more that wind and solar don't change their generation capacity in response to demand (it's either sunny or windy that day or it isn't), so you need a battery of some sort to store up output in excess of current demand and/or the ability to add generating capacity when hit with peak demand; that's where natural gas / coal plants are necessary given present technology.
Factory ceiling wind was the large fad some 5 years ago. Since then people stopped talking about it because it ceased to be a newsworthy.
Factory ceiling solar it about as big as solar on any other ceiling, that is, everybody is looking into it right now. But solar is severally supply-limited, so you won't see it growing any faster or slower than residential or solar farms.
"The future is here, it just isn't evenly distributed". Obviously power costs vary from location to location, and plants take a while to build and shut down, so the market can't react instantaneously to changes. I was answering the OP's question about general trends.
Someone needs to tell the currently sitting Australian government, whose very own (now, not then - they are on high rotation) prime minister brought a lump of coal into parliament in 2017 and said "Don’t be afraid, don’t be scared, it won’t hurt you. It’s coal."
Somebody should also tell the current government in Queensland. Currently royalties is over $4 billion. They should start looking at alternative income.
Don't believe politicians when they promise they will change industries. In our free market society, only economic conditions will change the market. This is very relevant with our current news about tariffs.
Well, it can be both. Just because it's good for the environment, and maybe even the economy as a whole, doesn't mean that it's not causing pain. Real pain, to real people. Who really should be helped, perhaps helped to get those jobs in solar and wind!
If we had a functional Congress, that's the sort of thing we would be doing.
I agree to the people losing its life shattering, especially when one considers entire communities and ways of life are built around it. Another aspect to consider though is that coal in its entirety employs less people than Arbys the fast food restaurant. If tomorrow, the news announced that Arbys was in danger of going out of business, the country would shrug. Coal wields a disproportionate amount of political and cultural power for the number of people it employs and the damage it does.
Maybe because Arby’s jobs are shit, and even if they weren’t the skills easily transfer to the thousands of other restaurants.
Coal jobs are in that waning category of blue collar jobs that you can have a decent life on. So it’s lamented the same way as when auto plants close, manufacturing plants close, etc.
You’re right it has too much power, but you have to put more effort into understanding why.
Of course it's anecdotal evidence, but I listened to a podcast a while ago (don't remember which one) that invited a government clerk that helped people find retraining programs. According to her, her department has so few people applying that they would accept literally any request for training - even if it had nothing to do with what the funds were allocated for (in this case retraining from coal to solar). According to her, a big part of the problem is you have people in (usually small) towns whose parents lived their entire lives working coal, and think that the only way to be a man is to work it too.
I'd be curious to see how this trend holds up among the various blue-collar careers. My parents were commercial fishermen and they wanted me to get as far away from fishing as possible.
Can't speak to that specifically, but one thing I have heard in other similar cases is that the people who try the retraining programs, find that they don't work. Some people can sit in a classroom and listen to a lecture and learn something, other people learn by doing something on the job.
If we still had widespread apprenticeship as a way to learn, this would be fine. Classroom training isn't really the greatest way to learn something. But it's the way our society has doubled down on in the last generation or so, to the point that high schools shut down shop class programs and expanded AP, regarding anyone who didn't go to college as a failure.
Again, I don't know if it applies to the case you're discussing, just raising it as a possible explanation.
Problem is, retraining programs are generally ineffective, between 0-15% according to some sources. So transitioning workers from job A to job B is really more of a pipe dream than a reality.
It’s also partially why calls for UBI and other alternative solutions are gaining traction nowadays (although, atm only one person is running on that platform for President in the states)
Have there been any "successful" UBI experiments? I've seen results from a few that didn't pan out as expected, but conclusions were generally either that the method was flawed (which might be a cop-out) or that the amount provided didn't rise to the level of "true" UBI.
I'm genuinely curious as to whether it could replace other existing welfare programs, or if it would exacerbate self-destructive behaviors in the absence of opportunities for earned and delayed gratification.
Many UBI ‘trials’ have been run but stopped short of completion. Results never pointed to any negatives (unless you count level unemployment as a negative like it was counted in Finland). Generally outcomes are positive. Moreover programs akin to UBI have worked in places like Alaska.
Many of these trials are cut short due to ‘unsustainability’- generally due to the fact that the programs aren’t actually paid for by anything- UBI on its own is unsustainable ! As such, the candidate I mentioned above is running on a platform that looks to consolidate existing welfare programs and implement a VAT to help afford the policy.
Links please. You are making a lot of statements without any backing like "are gaining traction" and "have worked". Since you are having to educate us on these basic facts of the thing your excited about, could you go further and provide us good places to learn more?
I don’t believe the size of the payout is the right metric to be looking at. There’s more in common with UBI than you might think:
The government paid out some amount, to all residents, regardless of income, to be used unconditionally. Pretty much the defn of UBI.
To your point about standard deduction - it on the other hand does not pay out anything if you don’t make anything. The petro fund is an actual dividend, very much not a deduction.
UBI is substantially different than just handing out cash. The basic premise:
1) It is sufficient to provide a "basic" level of income
2) It is more efficient than targeted welfare programs (medicare, medicaid, food stamps, etc)
3) Community outcomes are improved by way of economic (retraining / small business starting), health (less stress / more treatment) and poverty (less stress = smarter financial choices)
So far, I haven't seen any experiment actually test any of those things. I don't know of any where participation has been contingent upon giving up other programs (so we don't know if it's better than targeted welfare), and none have lasted long enough to know if any behavior changes were influenced by the knowledge that the cash was going to be cut off in the future.
As such, I haven't seen much "success" in the way of UBI experiments.
BIEN lists the following five defining characteristics of basic income:
Periodic: Distributed in regular payments,
Cash payment: Distributed as funds rather than, for example, vouchers for goods or services.
Individual: Each citizen (or adult citizen) receives the payment, rather than each household.
Universal: All citizens receive the payment.
Unconditional: Recipients are not required to demonstrate need or willingness to work.
Your points 1, 2, and 3 are not definitions of UBI.
EDIT: the Finland trial looked at many of the outcomes you described above- linked above. Only half of the results are currently available. As I'd already mentioned, there hasn't been much in the way of negative outcomes in existing UBI and UBI-like trials.
Without points 1, 2 or 3, all you're testing is whether or not giving financially strapped people no-strings-attached money makes them happier and less stressed. Of course it does, at least in the short term (longer-term studies have demonstrated that money does not, in fact, buy happiness).
That doesn't mean that any of this is good public policy, that it would be better than current policies, or that it would improve long-term outcomes.
Notably, your Finland link indicated that there was no change to employment rates, which is unfortunate, and I think undermines a lot of the arguments I've heard from proponents of UBI- that people who are less stressed financially will be able to make better use of their time training into new industries, start small businesses, etc.
Yes, I already mentioned the employment thing. And this was only in regards to 1year of the trial/
Moreover, all these positive outcomes you seem to dismiss (and add that in the long term money doesn’t buy happiness- which is neither here nor there) doesn't mean that any of this is NOT good public policy, that it would NOT be better or that it would NOT improve long-term outcomes.
If anything, all the outcomes: lower stress, greater happiness, etc, are all known to lead to healthier individuals, with more fulfilling lives, with plenty of potential benefits for society as a whole.
Moreover, trialing UBI is a red herring. How many welfare programs have been trialed before implementation? How many have been researched thoroughly on their per dollar outcome? The fact is, many of these programs are implemented without any trial and only on the basis of perceived outcomes that would lean positive. Why should UBI be any different?
There are also plenty of examples that show that direct cash is oftentimes more favourable than some other variant; see the charity GiveDirectly’s entire premise.
To argue that no successful trial has been run, that outcomes have not been favourable, or that the general idea of UBI is flawed until we research it to death, is to be overtly skeptical.
It's the "U" part. Taking money from the middle and upper classes just to give it back to them is inherently inefficient and entirely pointless.
Additionally, I disagree that it has been researched to death. People have infinite wants, and we have finite means. I would personally rather see this play out at a smaller level in reality (not a time limited trial that biases the outcome) before we go all in on 300 million people. And if we are not going to be replacing existing programs with it, I would rather not see it happen at all. That's my personal preferences based on what I currently know, at least.
Current proponents of UBI aren’t looking to fund it by taking money from the middle and upper class AND are looking to consolidate it with existing welfare programs.
I'm fine with UBI, but I don't think it fixes this kind of problem. A good job is not just a source of income (though of course it is that). It has a lot of other psychological and social impacts as well, which UBI doesn't replace.
But again, not saying it's not a good thing, just that it doesn't really solve this problem.
That reverses the causality. The opportunity existed 12-15 years ago; coal mining concerns going bankrupt is at the end of the process. Natural gas being able to beat the pants off coal on both price and pollution while also being generated in the US is the reason that natural gas plants opened and coal ones closed.
Price and pollution yes, but carbon no. Natural gas plants, while nominally 490 gCO2-eq/kW vs. coal's 800, are still very high carbon. Add in methane leaks from pipeline distribution and then LNG compression energy as the export market from the US rapidly increases in the gulf and it's parity. Fracked natural gas is a disaster from a climate change perspective.
This is why we need to price in carbon externalities in energy markets.
Agreed that pricing in carbon externalities is a necessary step, but that will only make solar / wind / hydro more attractive with respect to natural gas. My point was more that the reasons that the coal industry is dead is that natural gas won exclusively on short-term economic thinking with zero contemplation of externalities.
I'm more concerned about nuclear being more attractive wrt natural gas, since huge low-carbon nukes are getting shut down right after coal to be replaced with fracked natural gas. This is backwards from a climate change perspective.
Damn fracking pulled the bottom out of electricity prices, screwing over nuclear plants whose O&M is pretty high. They were fine when electricity revenue was normal. But fracking dropped it off.
There was pretty much nothing going on in terms of nuclear power development in the US between 1990 and 2008 or so, and Watts' Bar is the only reactor to come online in the US in the last 25 years. Fracking wasn't the cause of that lull.
People stopped building new reactors in that time but they were also doing license extensions and operating and making good money. Today they are shutting down early in deregulated markets because natural gas brought electricity revenue below O&M costs.
“The most likely candidates for a coal-to-gas conversion are 50-plus year old units, less than 300 megawatts in capacity and generally early generation sub-critical utility boilers – the least efficient, most costly to operate and with the lowest overall capacity factor in the coal fleet,” he wrote. “Most plants west of the Mississippi River built in the 1960s or later aren’t as attractive as candidates for fuel switching since they are often larger, more efficient and tend to burn Powder River Basin coal, a cost effective fuel with a more favorable emission profile than the bituminous burned by many eastern plants.”
Sidenote: Power River Basin coal is that which is mined by the company this article refers to as having entered bankruptcy.
A comparison which doesn't lessen the pain for those 50,000 mostly well-paid people in any regard what-so-ever.
Those jobs are often not easy to replace financially for the people working them. It involves uprooting their families, or being away for weeks at a time, working in the natural gas industry or similar, and they still don't make more than they were making in coal. I grew up around coal country Appalachia. Making $50,000 per year in a coal mine in the early 1990s, anywhere in Appalachia, was a financial godsend for those workers. I knew a lot of families that it provided a solid middle class life for, people that otherwise were going to be stuck working low wage jobs in those regions, if there were any jobs at all (and it was a hard, dirty, unhealthy, dangerous job; they all knew that).
A typical Sears worker has plenty of other opportunities at comparable or higher pay. There isn't a shortage of $13-$15 / hour jobs in the US, particularly in the locations where most Sears stores operated historically.
We should be putting those workers to work as part of the NPS/US Forest Service in Appalachia and the Rocky Mountains as these extraction jobs phase out. Better to focus on conservation and remediation instead of extraction IMHO (and the cost to employee someone in such a role is not much higher per person, ~$65k/year, than they'd receive at max social security benefits [~$35k/year]).
Better yet, put them to work reclaiming mine sites where possible. Rape is not too strong a word to describe mountain top removal. I don't even care if it comes out of my taxpayer dollars instead of the pockets of the coal operators who need to be held responsible, I just want it done. It has to be done, there are places in West Virginia that have been on boiled water warnings long before Flint. And so much of Appalachian culture is having deep ties to the land, so it'd be very meaningful work in the same way being an nth generation coal miner is meaningful work, regardless of how misguided that seems to outsiders.
Interesting idea. What does reclaiming a mine site achieve practically? Any chance an abandoned mine could be repurposed as a datacenter, solar panels lining what used to be a mountain top?
Not all coal mining happens in Appalachia (this specific company mines in Wyoming and Montana). Is it unreasonable to expect it straightforward to transition workers from an industry that employs less people than Arby's (the fast food establishment) into other roles?
Like the automobile was for farriers and the refrigerator was for ice deliverers.
It's awful because real people are losing their jobs and probably don't have the best prospects. It's necessary though. It's one of the reasons a good government has social programs to support those whose jobs become obsolete.
> Like the automobile was for farriers and the refrigerator was for ice deliverers.
One significant difference: coal employees are concentrated in a relatively small number of communities, which means that those communities are collectively suffering greatly, and the employees have fewer opportunities because there are no more jobs locally.
Farriers and ice deliverers were relatively evenly distributed, lessening the overall community impact and making it much easier to find a new career.
Another significant difference is that coal is concentrated in states that even though they have almost no population still wield 2 senate seats. This is one of the, if not the reason that coal continues to thrive.
Coal continues to "thrive" because it went out of its way to keep those people impoverished and unable to fight back while it bought their state governments from governors down to school boards and sherrifs.
You should go read about the Battle of Blair Mountain and the Coal Wars. Big Coal more or less committed genocide in Appalachia and not only got away with it but had some assistance from the US government. That's how powerful they are. The number of senators these states have is pretty irrelevant in the grand scheme.
A failure on the part of the government and themselves to prepare for the inevitable. Mostly the government, since they're the ones we measure by unemployment rates.
Tennessee had a budding green power sector back around 2005. TVA nuked it with absurd, arbitrary restrictions on who can put up solar panels on their houses because TVA is in bed with the coal operators and green power was competition they didn't want. It kills me to think about how much more money this state would have in its economy now if that hadn't happened.
There's reasons the whole "just replace coal jobs with solar jobs" thing has never played out. It's not for a lack of trying or because nobody here ever coming up with the idea. It's because the powers that be sure as hell weren't gonna let it fly.
(TVA continues to be the least green utility in the South btw. Promotion of the welfare of the people of the Tennessee Valley my ass.)
You can easily skill shift a coal miner into eg the natural gas industry. Including at 10 years prior to retirement. I've known at least a dozen miners that transitioned to natural gas, in the greater Marcellus shale region.
When shifting an experienced miner to the natural gas industry, the problem isn't education, it's replacement pay. They're usually technically, industrially competent people, and are well suited to the oil and natural gas industries as far as ease of skill adaptation goes. It's something our government/s should be pursuing aggressively (except usually the states where the coal industry exists don't want to go against those jobs and actively encourage that shift). If done correctly, you could make the job shift from coal to other energy industries far easier, buffering the labor hit, and drain the coal industry of the labor it needs to operate (accelerating its demise).
Replacement pay and relocation. Asking an older blue collar worker to move away from family and friends to another state, more or less involuntarily, is much harder than encouraging a young tech worker to move to, say, California.
Really doubt that solar companies are hiring in the same towns as coal mines are. The reality is that when the mines go, the communities supported by the mines will go, too.
It is only "hardly a pain" when you look at the whole country. But for cities where the only meaningful employer in hundreds of km range is the local mine and its suppliers and customers, the consequences of a rapid unscheduled employer disappearance are disastrous.
And who would have thought: exactly those regions are, no matter the country, the ones where the right-wing populists easily gained and kept ground. I mean, sure, the people there will wake up once they realize that no amount of kicking out foreigners will bring back their coal jerbs, but for now democracy is stuck with the aftermath of decades of ignorance.
While that is correct, the article suggests the market is seeing reduced demand as utility companies increasingly turn to gas-fired generation and renewable energy for electricity.
For such a large coal producer to be struggling with that lower demand (and hence the lower price) suggests most of the sector will also be struggling with those adverse market forces.
> For such a large coal producer to be struggling with that lower demand (and hence the lower price) suggests most of the sector will also be struggling with those adverse market forces.
That is one possible reason... and probably the most likely one.
I suspect you're giving them too big a benefit of a doubt. It's equally likely that the coal company's owners have decided they've milked the cow for as much as they could and can now shut it down before liabilities (clean-up costs + retirements) catch up with them.
"Almost half of all the coal produced in the United States is mined by companies that have recently gone bankrupt. This Article explains how those bankruptcy proceedings have undermined federal environmental and labor laws. In particular, coal companies have used the Bankruptcy Code to evade congressionally imposed liabilities requiring that they pay lifetime health benefits to coal miners and restore land degraded by surface mining. Using financial information reported in filings to the Securities and Exchange Commission and in the companies’ reorganization agreements, we show that between 2012 and 2017, four of the largest coal companies in the United States succeeded in shedding almost $5.2 billion of environmental and retiree liabilities."
https://www.stanfordlawreview.org/print/article/bankruptcy-a...