>...Additionally, wealthy people can use securities as collateral for near zero interest lifetime loans which also bypass having to pay income tax.
This is just Internet mythology. The IRS would go after such arrangements very quickly - the IRS has the Applicable Federal Rate for loans. Though this really isn't an issue with banks as they are not charities and tend to want to make money.
The buy, borrow, die idea came from McCaffery in the 90s which was before various IRS sections like 1259 and 7701(o) were codified.
Go get a calculator - if you took out a loan and had the interest set a the minimum of the AFR, what would it compound to in 30 years? It would obviously be much higher than just selling stock and paying capital gains on it.
The ultra rich do take out loans, and these loans do get repaid, and that money has to come from somewhere. Go google something like billionaire stock sales to see examples - if they all could just say, "Thanks for the zero percent interest loan! I'll pay you back in 30 years in my estate!" - I think they would have.
You're going to have a hard time convincing me the wealthy aren't gaming the tax system after all the reporting and leaks over the last ~40 years.
I suspect you are simplifying what's happening quite a bit, not sure if it's intentional or otherwise. But wouldn't the more likely scenario be that you borrow 100m with a 10 year draw at x% interest and then at the end of the 10 years you do a stock sale (some taxes paid), pay the interest (interest is generally non-taxable) and then take out a new loan for 500m based on your much larger portfolio, and finally claim significant losses against some other asset (regain your actual stock sale taxes losses "oh no my art lost value!")? Repeat ad nauseam until you're dead.
>You're going to have a hard time convincing me the wealthy aren't gaming the tax system after all the reporting and leaks over the last ~40 years.
Obviously every person tries to avoid taxes - you don’t have to be rich do do that - but the idea that there are magic banks that loan money and don’t mind waiting decades to get their money back is some kind of weird propaganda.
>...I suspect you are simplifying what's happening quite a bit
People keep saying “buy, borrow, die” as if it is really that simple - like it is that one simple trick that banks and the IRS hate.
>...But wouldn't the more likely scenario be that you borrow 100m with a 10 year draw at x% interest and then at the end of the 10 years you do a stock sale (some taxes paid), pay the interest (interest is generally non-taxable) ...
Your scenario is not “buy, borrow, die” as a core concept of that meme is you take advantage of the stepped-up basis upon death and the estate pays the interest. With your scenario the person imght have an interest payment of 50 million + the original 100 million, so now they have to sell enough stock to pay the 150 million and the 23-36% taxes on the gain (depending on the state they are located in - obviously different for countries other than the USA). That isn’t estate planning, that is hoping your stocks really go up and that the loan doesn’t come due in a downturn like 2008.
>"oh no my art lost value!"
That trick where for example, where someone would donate some painting to a museum and pay someone to say the donation is with N million, might have worked at some point in time, but that kind of thing is pretty much guaranteed to get an audit these days from what I have read and I would be very careful trying to do that.
A variant of the "buy, borrow, die" which some claim is done is basically that a bank essentially becomes a minority shareholder of the estate for giving the money. Though I recall one CPA who dealt in this area replying that none of the family offices he knew would likely be interested in this approach - people like Goldman Sachs are not your friends.
This is sometimes referred to as Pournelle's Iron Law of Bureaucracy:
>Pournelle's Iron Law of Bureaucracy states that in any bureaucratic organization there will be two kinds of people":
>First, there will be those who are devoted to the goals of the organization. Examples are dedicated classroom teachers in an educational bureaucracy, many of the engineers and launch technicians and scientists at NASA, even some agricultural scientists and advisors in the former Soviet Union collective farming administration.
>Secondly, there will be those dedicated to the organization itself. Examples are many of the administrators in the education system, many professors of education, many teachers union officials, much of the NASA headquarters staff, etc.
>The Iron Law states that in every case the second group will gain and keep control of the organization. It will write the rules, and control promotions within the organization.
Well many government pension funds are horribly underfunded, so likely it would just add to the underfunding till eventually the government would bail it out.
It is an expensive, inefficient way to try and solve the issue - when they screw up this bad, you fire them - this is how every other organization works.
Depends on what you call a “war” since the last time the US declared war was in WW II.. In terms of military operations, a partial list would probably include:
Seems balanced when you put them in a simple list like that, so it might not be obvious that the republican started wars cost many, many orders of magnitude more lives and treasure than the tiny actions attributed to dems.
If sending military advisors to a country is starting a war, the list of wars started by each President will get MUCH larger.
(For some reason most people associate the Vietnam war with the President who deliberately lied to congress to get a use of force authorization and then literally sent over half a million troops into war.)
More seriously though, it's not as simple as 25% fewer jobs, or an economy that grows 25%. For example the number of elected positions is pretty fixed, and all those octogenarians in the senate are certainly blocking younger talent.
Politics may be an extreme example, but lots of other jobs are "proportional". There's a fixed number of plumbing jobs (per million head of population) so adding 25% more plumbers dilutes the plumbing pool. A boon in construction would drive up the demand for plumbers, but construction booms come and go.
The "economy" is (again simplistically) a measure of money flow. It doesn't really measure "production" as much as it measures "cash velocity". As such having a retired tranche spending all day long is a good thing.
And yes, more labor would lead to a growing economy. But a lot of that growth is in "poor quality" jobs (aka service level jobs) not "new production".
In other words the economy "grows" if money changes hands quickly. The standard of living though is more tied to "production".
Take, for example, health care. The sector can grow 25% by adding more admin staff, claims evaluators etc. None of which results in better health outcomes. Or it can grow by building hospitals, training doctors and nurses. Both increase the economy, both offer more jobs, but only one leads to a higher standard of health.
In truth the current economy is built around the customers free time. From music, movies and tv, to sports, travel, phones, social media, online advertising and sales, deliveries (of goods or people), restaurants (fast or slow), home improvement, it's all about monetizing free time.
Having a large customer base with nothing but free time is what makes it all work.
>...I don’t know why people downvoted this because it is obviously correct. In a democracy you have to buy the votes of the largest constituency with other people’s money,
In the last few decades both political parties in the USA have tried to outdo each other in reckless over-spending, but for the first couple hundred years that wasn't the case. Something changed.
If your parents were WW II vets, wouldn't they be part of Greatest Generation (often considered to be those born 1901–1927)? Silent Generation are often considered to be those born 1928–1945. They weren't adults when WW II was fought.
>A lot more utility solar has been installed since then.
Yes, utility solar is very safe. Unfortunately rooftop solar is much more dangerous and also much, much more costly. So one has to wonder why anyone supports the massive subsidies that are still given to rooftop solar.
Note that it's massively more expensive in the US than other nations due to paperwork and regulations. But even there it costs about the same as the low end of nuclear costs per KWh.
Adding it when building the home in the first place eliminates much of the cost and danger since you don't double up on a lot of things.
The consumer rooftop solar cost is usually one of the most expensive ways you can generate electricity - often several times the cost of utility solar installations. The high rooftop solar price is usually hidden (at least in the USA) because no power source has been as subsidized as rooftop solar. Besides direct subsidies, wealthier home owners have often been paid the retail rate for the electricity they sell to the grid. This causes higher electricity bills for those in apartments and those who can't afford to put panels on their roof. Also, in almost all cases, the home installation doesn’t have enough battery power to actually last through inclement weather and so is free riding on the reliability provided by the grid, putting more costs on the less well off. The whole thing is sort of a reverse Robin Hood scheme.
Rooftop solar is good but it shouldn't be a gift to the wealthier residents paid for by those less wealthy. Any subsidies for solar power should go to utility grade solar. Money is limited and is fungible - a dollar spent subsidizing utility solar will go much, much, further than a dollar spent subsidizing wealthy homeowners who install panels on their roof.
> The high rooftop solar price is usually hidden (at least in the USA)
My understanding is that the (unsubsidised) price of rooftop solar is only high in the USA. Because the cost is almost entirely labor (high in the US) and issues around permitting (more restrictive in the US). Pretty much everywhere else in the world you'll now save money with rooftop solar + batteries even if you can't sell back to the grid at all. Even places that aren't that sunny like the UK where I live.
It is still more expensive than "grid scale" deployments. But there are positive externalities that make up for that: uses otherwise unused space, less grid capacity needed, adds resiliency to the grid (if implemented well with storage).
I recently specced a 500kW project. Quote was $CA1.67/Watt. But I'm pretty sure they would have bumped that up a lot higher later in the process if we hadn't stopped due to permitting hurdles.
> Besides direct subsidies, wealthier home owners have often been paid the retail rate for the electricity they sell to the grid. This causes higher electricity bills for those in apartments and those who can't afford to put panels on their roof
I don't think you thought this up yourself, so I won't blame you for it, as this exact, word for word swill is mindlessly repeated by a lot of people, so thats ample evidence of brainwashing going on.
The subsidies and retail rate (both of which have been murdered by now thanks to swill like this) incentives were not a sneaky reverse welfare program snuck in by the wealthy.
They were infrastructure incentives for people who could afford to make those infrastructure investments.
Investments have always required incentives and a positive ROI. You don't put money into your 401k, Roth or HSA because you expect to lose money in 20 years.
The goal of solar subsidies was never some sneaky wealth redistribution with unforseen sideeffects but rather to rally support from the private industry and wealthy homes to spearhead rapid decarbonization, energy independence, and grid decentralization.
A single mother treading water, barely being able to afford groceries isn't your persona for actually making rapid decarbonization, energy independence, and grid decentralization happen - however, the wealthy that you so despise of, certainly put a 10kWh (sometimes more) PV array on their 3000 sqft rooftop and actually feed power to the grid that was reeling under tremendous growing strain.
People hanging portable solar panels from the balconies of their apartments barely make power to run their kitchen fridge so that's out as well.
Mom and pop landlords and corporate run apartments aren't going to put solar for their tenants because they are not legally allowed to sell power above utility rates while they don't enjoy the 10% guaranteed ROI that utilities get (which is where utilities actually make their money), so that's out too.
This makes me sad - We could have had a future where the grid was fully decentralized, where our single mother neighbor would never had to worry about the lights getting turned off even when there was a downed power line or wildfire or a snowstorm turning down power lines half a mile away, where she could plug in her EV into my shed instead of having to drive miles away to a crowded charging station.
We are numbers people here - so here's a numbers perspective:
If I had taken the same money I had to spend on a "grid compliant" installation (so I could connect all of this to the grid) and put it into the SNP500 instead, I would never have had to worry just about a power bill (as bad it is - $0.60/kWh) but also my inflation adjusted grocery bills for the rest of my life.
You won't convince many people if you think ad hominem attacks and insults are acceptable. Yes, subsidies are done to help drive adoption. The key is that the subsidies should go where they can do the most good. Money is limited and is fungible - a dollar spent subsidizing utility solar will go much, much, further to decarbonizing the grid than a dollar spent subsidizing rooftop residential solar.
My response is the opposite of ad hominem. It's me noticing and acknowledging that a large group of people comment on energy policy who understand neither energy nor policy but feel confident to both vote and comment on energy policy because they have been brainwashed.
> a dollar spent subsidizing utility solar will go much, much, further to decarbonizing the grid than a dollar spent subsidizing rooftop residential solar
That's completely, trivially provably wrong.
For one, rooftop residential allows decentralization and redundancy. Customers can have their house continue to run while the grid as a whole is down.
Utility solar absolutely does not - solar here is just another source of energy into the centralized grid. From a physics and math perspective, that source of energy could very well have been a coal plant. It doesn't have the same decentralized and redundancy benefit as a 10kWh PV array and a 30kWh battery on a home where the home no longer even needs the grid anymore.
Any rational consumer would appreciate having power than not - We cannot argue physics and math or consumer demands - that's just insanity.
A person who repeatedly argues against this basic math doesn't have the best interest of the consumer in mind. Further, when there's a group of people who repeatedly argues the same illogical swill using the same phrasing as the others, it's a cult.
I could go on and on but I have learned that arguing with brainwashed people takes a lot of time and effort and most of the time, in the end, it ends in a stalemate. Most of the time, it reenforces them they are right and the other side is ignorant and "doesnt get it". No thank you.
On this very thread a person who actually designs and implements grid projects agreed that the only objective utility solar serves are those of the utilities themselves.
The reason why this person is provably correct is because you could come to the same conclusion from first principles as well. To most people, the above statement is a "duh!" moment.
They gave solid, clear, objective examples of how utilities have other much higher priorities than ensuring consumers have access to the most affordable, reliable, resilient power.
They further gave evidence and insight into how the way utilities fund their infrastructure projects actively make them opposed to what's good for the consumer, because decentralization and redundancy would collapse the value of existing collateral.
Now that's a high quality, high value, high merit discussion.
When someone comes and lectures me about how my dollars should go towards initiatives that absolutely do not help me, rather makes me even more dependent on a 3rd party that doesn't have me as their first priority, I dont care about what they have to say especially when I have options available where my dollars directly go towards initiatives that absolutely do help me.
The most generous interpretation I have of their motives is that they are brainwashed.
I would encourage beginning from first principles, gaining clarity into what the final objective is - to provide affordable, redundant, reliable, resilient power to the consumer or to ensure the utility has smoother operations and a tighter grip over the consumer and ensure the consumer is completely dependent on the utility?
If the brainwashing isn't complete and there's a tiny chance of a breakthrough, maybe changing domains would help?
What's better for a local economy that has willing, capable backyard farmers:
- allow them to sell their product that meets all regulatory requirements, to other willing consumers at the same market clearing price or
- destroy them completely and remove any incentives for them to grow, in favor of having a massive, centralized farm?
I have some experience with distributed energy generation and have met with senior utility executives many times while trying to implement some grant supported projects through my work.
It turns out that a big problem is that whenever we install local generation it costs utilities a ton of money. They bundle the cost of grid maintenance into their per kWh charges. These costs, which include debt service, maintenance, upgrades etc amount to 5-7 cents/kWh. Whenever you generate your own energy you cost the utility 5-7cents/kWh that they have to pay regardless of your usage.
This business model, which has bundled grid maintenance into usage costs means that utilities put up huge roadblocks for distributed generation. They say they love it, but they actually hate it. Utility executives have looked me in the eye and said as much.
It gets worse though, because energy infrastructure is backed by trillions in utility bonds. These "low risk" debt instruments are owned by national and private pension funds of mind boggling size. In order to bring about a distributed energy future the grid (and low pressure nat gas infrastructure) must be reorganized in a manner that is likely to make those bonds worthless. These background factors are definitely in play when you see these bait and switch enthusiastic green energy programs that turn out to be a regulatory quagmire when you dig into them. Public utilities and pension funds hate green energy, they are a major factor in west's pathetic performance when it comes to solar adoption vs China.
> It turns out that a big problem is that whenever we install local generation it costs utilities a ton of money
So a question:
- Lets hypothesize that distributed, decentralized systems cost way more than centralized systems
- If you agree with that hypothesis, can we next hypothesize that building a distributed, decentralized system that can support power on one block and can allow it to continue to stay on while the "central feeder line" (please tell me the proper word for this made up word is) to all the blocks is down, because that one block has a local distributed, decentralized power source, is of value to the community?
In the past, commercial factories were the only places that could afford this kind of redundancy but it feels to me, thanks to crashing prices of solar and batteries (I could never have imagined 12kWh brand new LFP could be purchased for $2k), this level of redundancy is now very much realistic at the consumer, residential level. It just doesn't work locally today because the utility poles lack the smarts to do the isolated switching and safe islanding. For example: one unsettled question today is if a lot of customers on one such island are on solar and the grid is down, how do we safely supply power within nominal specs to the whole of the island - but this isn't a physical unknown, we know how to solve it. It just is lacking implementation.
> These costs, which include debt service, maintenance, upgrades etc amount to 5-7 cents/kWh. Whenever you generate your own energy you cost the utility 5-7cents/kWh that they have to pay regardless of your usage
Capitalism has repeatedly proven its ability to cut costs down while improving QoS. I realize you really believe in the numbers you have been provided - that it costs a utility 5-7cents/kWh that they have to pay regardless of my usage, but before SpaceX, it used to cost multiple millions of dollars and years of planning and design to launch one rocket.
In this case the utility executives work for public utilities. So capitalism isn't to blame. It's about the incentives of the incumbent energy providers.
It is already cheaper to build the distributed energy solution you describe but making that change would require a massive restructuring of electricity and natural gas utilities. Such a restructuring would revalue the debt that backs the existing infrastructure. This would be a great thing for the average person but not for the people currently in charge of regulating what types of systems are allowed.
Costs of distributed energy may drop so low in the next 5-10 years that it will no longer be possible to keep things from moving to a micro grid network.
> but making that change would require a massive restructuring of electricity and natural gas utilities. Such a restructuring would revalue the debt that backs the existing infrastructure. This would be a great thing for the average person but not for the people currently in charge of regulating what types of systems are allowed
fair. I appreciated the insight in your original message - datapoints from industry insiders like yourself do help people like I gain some understanding of why we have to go in alone on this and not wait
> Public utilities and pension funds hate green energy, they are a major factor in west's pathetic performance when it comes to solar adoption vs China
No this statement is absolutely wrong. Here's why:
> west's pathetic performance when it comes to solar adoption vs China
China is dominating energy because the CCP doesn't care what their citizens think. They need energy and they are doing everything they can do to get it. They will put you behind bars at best or kill your family and demolish your house if it gets in the middle of a power line trench. For China, energy isn't a "nice to have" - they realize it's essential and they won't stop until they get there.
China is the person out in the mountains being chased by a hungry bear while we in the west is the person sitting in their air conditioned room debating whether to drive or take an Uber to have a drink with buddies.
News came out last week that you can buy a Chinese hypersonic missle for $100k - you can't even build a little two car garage where I am for double that price.
> Public utilities and pension funds hate green energy
Pension funds don't care whether energy is green or orange. What they hate are the horrible returns affected by all the stealing and grifting that happens in the name of "green energy".
Public utilities (atleast in the jurisdictions that I am aware of) love any infrastructure work - they are guaranteed a 10% ROI by the government on any approved infrastructure work they do. If you could work with them to build infrastructure to cremate just newborn kids and get it approved by the CPUC, they will happily start work on it tomorrow. The reason why they hate green energy is because after they've made their 10% ROI, they are now stuck with a power source that costs them more than their non-green sources and that hurts their razor thin margins.
However, as the customer - I don't care either about what public utilities and pension funds hate or don't.
What I do care about is having affordable and reliable power and I absolutely can get that with my own solar panels and batteries. The fact that it's green is a happy sideffect for most.
The reason why every home in the U.S. isn't overflowing with solar panels and batteries is because of regulation and government shenanigans making retail costs really high. Average people in Pakistan, South Africa and Lebanon certainly power their whole homes with solar panels and batteries but their governments don't have nonsense taffifs and fees on Chinese solar equipment.
Totally agree that regulations and government interference are the reasons we don't have cheap solar panels.
Those regulations and that interference result from the fact that in a distributed world the current utility bond value drops to zero. Utilities will not build infrastructure that makes their existing infrastructure lose value.
I recently negotiated with a government owned utility on a large solar project. They were 100% against it until I demonstrated that the project would never feed back to the grid and wouldn't reduce the amount of power we currently buy from them. Zero interest in distributed solutions on their side. They are focused on giant transmission line projects and hydro.
> They are focused on giant transmission line projects and hydro
Is that because of the scale they need to achieve to support the investment?
> until I demonstrated that the project would never feed back to the grid
Financial greed aside, and I mentioned this previously, feedback at a large scale isn't free especially if the impedance of the grid cannot be predicted - the frequency or voltage or both would spike. Monitoring for these conditions are expensive and addressing them is even more expensive - the cheapest solution is you do a shutdown until things stabilize but this is kinda catch-22 because that itself might have its own cascading effects.
Let me ask you this - if you were to update a local neighborhood (like a block or two of 1000 homes) distribution station, that all have their own solar and battery, where the homes could independently power themselves for a day - what changes or upgrades would you make to ensure they can share load for that one day when the larger grid is suffering an outage?
Now would that cost and complexity be lower or higher if instead, nothing was changed at grid scale at all but each of the individual 1000 homes doubled their own capacity (let's say 30kWh a day if you're OK with that)?
https://old.reddit.com/r/AskEconomics/comments/1smjx29/was_c...