Clouds Over Solar

Sunita Narain

India’s solar power policy is now entering round two. And there is much that needs to be reviewed and reworked as the business of solar energy has seen massive turbulence in India as well as globally. In the first phase (2010 to 2013) of the Jawaharlal Nehru National Solar Mission (JNNSM) the target was to set up 1,000-2,000 MW of grid-based solar power in the country. By 2013, the country has indeed commissioned some 1,000 MW of solar power, but 700 MW of this target comes from the non-JNNSM state of Gujarat.

The next phase of the national solar mission kicks in from 2013. The Union Ministry of New and Renewable Energy has set a target of 9,000 MW of solar power by 2017, of which 5,400 MW will be paid by cash-strapped states. But three years is a long time in this fast-moving business. There have been drastic changes—for the good and the bad—in this sector since the mission began in 2010.

First, the good news: the price of solar energy has come crashing down in the past two-three years. In November 2010, when the first tender for solar photovoltaic (PV) power was opened, the lowest tariff was Rs 10.85 per kWh. A year later in December 2011, when new bids were opened, the tariff was down to Rs 7.49 per kWh. This makes solar energy attractive as it is now close to grid parity, with energy utilities buying power at Rs 4-5 per kWh.

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Lies, Damn Lies, and the Economist

Matias Vernengo

The World in 2013 by The Economist has been out for a while. Got it at the airport this weekend and read a few pieces. Really bad. Nothing new. One piece caught my attention though. On the fiscal cliff and the elections this terrible article says:

“Mr Obama will maintain that his victory, along with continued Democratic control of the Senate, constitute a mandate for his version of deficit reduction. But in fact the elections produced mixed results: Mr Obama narrowly won the popular vote and the Republicans retained their majority in the House of Representatives.”

First, facts; yes the GOP won the House, but Democratic House candidates won more of the popular vote than their Republican counterparts. Redistricting or Gerrymandering is what explains this failure of democracy. Dems probably need more than 55% of the popular vote to win the majority in the House.

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Jon Stewart Was Right

Gerald Epstein

Among the critical problems that were pushed aside by the “fiscal cliff” negotiations between President Obama and Congressional Republicans, none are more pressing – or more intertwined– than the criminally high rate of unemployment still plaguing the country and the massive debt overhang faced by underwater homeowners.

While President Obama, the House Republicans and billionaire-financed conservative pundits, economists and “think” tanks shriek about unsustainable debt and deficits, official unemployment languishes at 7.8% percent, while millions of Americans are struggling with underwater mortgages and many are facing foreclosure. We confront this perverse set of priorities despite the fact that, as Robert Pollin has repeatedly pointed out, U.S. government interest payments on public debt as a share of federal outlays is at an extremely low level of 7.7%, about half the level as when Ronald Reagan was President.

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Fears, ideologies and rational solutions to the European debt crisis

Carlo Panico and Francesco Purificato, Guest Bloggers

The media and some professional blogs are spreading the view that the European debt crisis is caused by the decision of the political authorities of the countries under attack to let their citizens live beyond the material possibilities of the economy. They advertise the unfounded fears that the taxpayer of the other euro-countries is becoming the victim of a money machine that rewards the profligacy of Southern European countries. As shown in our PERI paper The debt crisis and the ECB’s role of lender of last resort, these fears have become powerful political forces inhibiting rational solutions.

When the crisis began in April-May 2010, the Greek sovereign debt was around 300 billion euros and it was sufficient to buy a portion of it to persuade the markets that the authorities were determined to stabilise the interest rates. Yet, in spite of its independence, the ECB waited the end of the regional elections of May 9 in Renania-Westfalia (Germany) to respond to the speculative attacks, which had gambled on the view that the European authorities would not react until the election had ended.

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Sharers, Takers, Carers, Makers

Nancy Folbre, Guest Blogger

Some of the most vivid political rhetoric of 2012 reflects a debate that has lasted centuries. Who are the makers and who are the takers? Much economic theory revolves around efforts to distinguish the two. The conceptual effort is motivated by noble intent: presumably, a good economic system encourages making (creating more to go around) and discourages taking (redistributing what others have made).

Yet it is surprisingly hard to create a consensus about these labels, and past disagreements, still unresolved, lurk in the background. History is shaped by contending claims over who is more productive than whom. Powerful groups like to describe themselves as makers rather than takers, partly to glorify themselves and partly to discourage take-backs.

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US fiscal crisis far from over

Martin Khor

So, the United States at the last minute averted a “fiscal cliff” crisis last week, and the world gave a sigh of relief, since the fate of the US economy has strong impact on other countries.

But that sigh was accompanied by a shake of the head at how this drama involving a contest of wills between the President and the Republicans in Congress has become an American way of life.

Has the economy of the US and the rest of the world economy become too dependent on how Washington’s budget politics plays out?  It seems so, for some time to come.

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Credit River and the Green Cheese Factory: The Scandal of Endogenous Money

Alejandro Nadal

In 1964 Mr. Jerome Daly took a mortgage for $14,000 US dollars from the First National Bank of Montgomery in Minnesota. In 1967 he was $476 in arrears, the bank initiated foreclosure proceedings and bought the property at a sheriff’s sale. The bank then sued for possession and a jury trial was held in December 1968 in a township with a very appropriate name, Credit River.

Daly argued that the mortgage contract was null and void because it lacked consideration on the part of the bank. In legal parlance this means that in any contract both parties must exchange something of inherent value. When the bank had granted the loan it had simply inserted an entry in a ledger, thus “creating money out of thin air.” Because the bank did not commit anything of value into the contract, there was no consideration and the contract was null and void. The plaintiff had no legal base to claim Daly’s house.

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The Freshwater and Biodiversity Crisis

Edward Barbier

Yes, the “and” in the title is deliberate.  The world is on the verge of a crisis that is endangering both human water security and freshwater biodiversity.  That crisis is the rapid disappearance and degradation of one of the most endangered global habitats – freshwater ecosystems.

Around 3% of the world’s water is fresh, and 99% of this supply is either frozen in glaciers and pack ice or found underground in aquifers. Freshwater ecosystems, which comprise ponds, lakes, streams, rivers and wetlands, account for the remaining 1% of the world’s freshwater sources.  Lakes and rivers are the main sources for human water consumption, but contain just 0.26% of total global reserves.  Other important human uses of freshwater ecosystems include inland capture fisheries, which contribute about12% of all fish consumed, irrigated agriculture, which supplies about 40% of the world’s food crops, and hydropower, which provides nearly 20% of global electricity production.  Excessive nutrient loading of water bodies is also a leading cause of water pollution worldwide.  Human-induced biological invasion is another major threat to freshwater habitats worldwide.

Although freshwater ecosystems occupy only 0.8% of the Earth’s surface, they account for 100,000 to 126,000 (6-7%) of the estimated 1.8 million species globally.  Thus, as the various human uses put pressure on scarce freshwater habitats worldwide, their biodiversity invariably will decline.  This process is exacerbated by global environmental threats, such as climate change, nitrogen deposition and shifts in precipitation.  Already, freshwater ecosystems are experiencing declines in biodiversity far greater than those in the most affected terrestrial ecosystems.

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Biofuels and Hunger: The Story from Guatemala

Timothy Wise

It’s bad enough when bad policy causes unneeded suffering for those governed by that policy. It’s worse when the victims include those far from the policymaking. Such is the history of U.S. farm policy. Today, that history is being written in places like Guatemala, where the U.S. ethanol boom is contributing to hunger and landlessness among that country’s indigenous majority.

Thanks to the New York Times’ Elisabeth Rosenthal, we can see that history unfold in all its ugliness. She traveled to Guatemala for her feature, As Biofuel Demand Grows, So Do Guatemala’s Hunger Pangs. Her expose makes my own, which showed how U.S. corn ethanol has driven up corn import costs for poor countries, seem like just the proverbial outer layer of the onion.

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Stephen Resnick, professor of economics at UMass-Amherst, dies at age 74

On January 2nd, we lost a brilliant economist, Stephen Resnick, one of the founding members and a cornerstone of the heterodox Economics Department at the University of Massachusetts, Amherst. Steve, a devoted and fabulous teacher,  touched the lives of hundreds of undergraduate and graduate students over his career. Steve, along with his colleague Richard Wolff, worked tirelessly for decades to transform Marxian Economics and influenced the researching and teaching of scores of students. He will be sorely missed. Here we reprint an early obituary, written by one of his former students from Umass.

-Gerald Epstein

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