Fighting over Solar Subsidies

The Arizona Corporation Commission through APS levies a tax on homeowners to fund solar incentives. The tax on homes is $3.17 a month. Businesses pay a larger tax. (I know, this is called a tariff by the ACC, but from an economic standpoint, it is a tax.)

Now the debate is how to divvy up the money that they have to spend. Note that this is a political debate. This isn't about efficiency or consumer preferences which would be sorted out in a free market. This is about which constituency gets the government subsidy.

The debate has flared because, although APS has plenty of money from the tariff, including the $3.17 residential customers pay each month, the company is required to divide some of the funds between rebates to homeowners and business owners.

APS said it has so many applications for big solar arrays on businesses that it won't have enough money in that program this year for commercial projects at schools.

It has a separate pot of money from the tariff to give solar rebates to homeowners, and APS expects to have lots of that money left over at the end of the year because residential installations are not as popular as anticipated, especially during the recession, officials said.

As with most solar installations, the school projects aren't cost-effective without rebates from the utility and the federal government.

Read the article to get an idea of what each constituency is fighting for.

Cash for Clunkers - Running the Numbers

Cash for Clunkers - Running the Numbers

Christopher R. Knittel at UC Davis runs the numbers on carbon emissions for the cash for clunkers program and finds that they cost about $400 a ton. The CBO estimates a clearing price of $28 a ton under cap and trade.

CfC is a really expensive way of getting rid of CO2.

HT: Coyote Blog

Free Market versus Government Provided

One definition of economics is that it is the study of the allocation of scarce resources. Scarce simply means that we don't have as much of something as we would like. Because we don't have as much as we would like, we have to make choices in order to allocate what we have.

There are a number of different ways to allocate stuff. One way is to use the free market and let the pricing system and people's incentives take care of it. Another is to have the government provide the stuff, and then allocate it another way, usually by waiting.

A John Stossel video report (start at about 5:40) presents the difference between the two systems when it comes to CT scans in Canada. If you want one for yourself, it is government provided, but you get to wait a month. If you want one for your pet, you get to pay for it, but it's next day service. Pick one.

Update: Apparently when it comes to health care, it's better to be a dog than an human in the UK as well.

Drones and Structural Unemployment

Will fighter pilots become structurally unemployed? The first step seems to be training fewer of them while ramping up their replacements.

Increasingly, the U.S. Air Force is turning to unmanned aircraft to perform work once done exclusively by aviators like Johnson, the wing commander of Davis-Monthan Air Force Base in Tuscon...

In the space of a generation or two, officials say, Air Force bases like D-M could be doing much of their business by remote control, reducing jet noise over urban areas while saving money, improving effectiveness and preventing risk to the lives of military personnel...

This year, for the first time in history, the Air Force expects to train more unmanned aerial vehicle pilots - 240 - than conventional fighter-bomber pilots - 214...

One of Arizona's exports has been trained fighter pilots from Luke AFB and others. Perhaps the future export will be drone operators. (We'll definitely need a better name for them.)