The cost of peak-demand electricity

Marginal production of electricity is charged to suppliers at about £10/MWh. This is the additional electricity needed beyond contracted-for generation because of short-term variability in electricity usage across the country.

This will soon increase to more realistic pricing, capped at £6,000/MWh.

Modelling by Cornwall Energy suggests that peak marginal prices will realistically reach £2,000/MWh.

Customers are currently charged £0 for marginal energy use, although large industrial customers can enter into capacity auctions by promising to reduce consumption, and they also reduce consumption at peak times because of transmission pricing rules, which are not specifically the cost of electricity.

          Households use an average of 4,192 KWh/year (DECC, 2013 figures) or maybe 4,600 KWh/year (Shrinkthatfootprint.com). This is different from typical energy usage because, as with many things, some large users distort the average. Typical usage figures are currently set by Ofgem at 2,500 KWh/year.

          I haven’t found data on average electricity usage in W or KW, but this can be calculated from power ratings of typical household appliances. Peak energy usage happens between 4.30 and 7pm in the evening, usually in winters when people have their heating going and maybe use some additional heating to warm the house further just after getting in.

          At peak periods, above normal usage from fridges etc., a person might have a dishwasher and washing machine going, at 1.5KW and 2.5KW respectively, and might even have an electric fire on whilst also taking a shower in an electric shower (2KW and 8KW respectively). Other possibilities include a towel rail, at 250W, a tumble dryer at 3KW, a hoover at 1KW, a kettle at 2.2KW and an oven or hob at 2KW.

          But let’s stick with the person having a shower and doing the washing at peak period. That’s 14KW of demand that could be moved to a different time, but we don’t price in KW; we price in the amount of time for which KW are being delivered, or KWh. Let’s assume that the shower lasts 15 minutes but the rest go on for one pricing period of 30 minutes.

          That’s 10KW for 30 minutes, or 5KWh. At marginal prices of £2,000/MWH that’s only £10. At normal electricity prices it would cost 75p. That’s how much it costs to turn extra power stations on; we are charged 56p to run the washing machine, 30p to run an average fridge for a day (over £100/yr; fridges vary from £50/yr to over £150/yr) and 30p for a shower. Of course, that doesn’t include water costs, or washing  materials and so on.

          It’s £10 extra that person doesn’t pay. His neighbour doing cooking, cleaning and ironing after coming home might only incur a £5 cost for 5 extra KW over an hour, at lower peak prices. It would probably be even less; maybe only £1, as the £2,000/MWh figure is a peak price, only applicable for one 30-minute period during the day. £400/MWh is likely to be the marginal price for a longer period, such as 3.5hrs in the evening.

          You might well be willing to pay £1 to be able to cook and clean when you want to, but that cost isn’t paid by the customer making that decision. The millions of people choosing to live such routinized lives incur a cost which is spread across everyone equally.

          As a final example, let’s think of someone putting the kettle on during an ad break on television. It’s only a bit of hot water, so it’s not worth much. At peak periods, 2KW for a minute is 1/500^th of a MW for 1/60^th of an hour, which sounds like a small amount, but at predicted peak marginal prices it’s about 7p extra on top of the ‘normal’ price (about 15p/KWh, or 0.5p). Tea bags range a lot in price, but Google just turned up some that cost less than £1 for 20 at a big supermarket. The hot water can cost twice as much as some tea.

          Electricity demand fluctuates by almost 20GW during the day, reaching a total of just over 55GW on a typical day. Variable demand is an essential feature of our lives, but it needs consideration separately from providing sufficient aggregate demand.

          It’s hard to judge how much electricity is peak demand; by eyeballing the national demand curve I can guess the area under the curve as about 10GWh per day above the typical daytime demand levels (probably an underestimate). That’s almost 0.4KWh per household, which gives us a good idea of how easy it would be to fix this problem. On average, we need to move 8 minutes of tumble drying to be after 10pm or at weekends.

          The cost of this peak demand is big. 10GWh at marginal prices of £400/MWh is £4m; for 365 days it’s £1,460m, or roughly 10% of household expenditure on electricity bills. Yet households have no incentive to change their behaviour, because that 10% is added to everyone’s bill, no matter what they do. For the average person with a bill of £600, it’s only £60. Yet all the fuss over the last few years about energy bills suggests that people regard this as a big issue.

          If we accurately priced carbon emission (noting that we have very little pumped storage and marginal prices are therefore often dictated by gas power stations) the price of peak demand would be a lot higher, reflecting the true cost. As we move to more renewable energy, with unreliable generation, we will need storage anyway, and storage would remove much of the problem of peak demand. If we had many reservoirs of the sort we already have, at a cost of a few billion pounds each, we could save the billions of pounds we spend each year adjusting electricity generation to demand. Early investment will create jobs and benefit industry in the long term.

          From a right-wing perspective, the poor market in which consumers subsidize each other and don’t pay the cost of what they’re using is distortionary and inefficient. We should let people see the costs and decide for themselves. From a left-wing perspective, the cross-subsidy between consumers destroys any incentive to behave well, reducing environmental behaviour and distorting investment decisions in electricity storage.

          I don’t know if people will voluntarily pay more for the convenience; after all, people pay over twice the price for a packet of crisps from a shelf by the till when they’re hungry, but rarely buy a multipack and save the other 5 packs for later. On the other hand, people have been outraged that energy bills are so high, and this convenience is worth 10% of our total bill. What I do know is that people should pay for their own convenience, or that we as a society should act in a coherent way to support our need for convenience by building energy storage.

 

Conservative commitments - 6, 6 fails

6.     Build 200,000 starter homes

A laudable goal in some ways, but the devil is in the detail. Why starter homes? Where will they be built? To what quality will they be built? Who will pay for them? This policy is a nothing policy. It’s an aspiration with no substance, and the manifesto gives no further detail, actually describing it as an ambition rather than a promise. Relaxing planning laws is not an option, because the Conservatives don’t want to annoy the NIMBYs who care only about their own house price, not the national or local good. If it were an option, how would quality be ensured?

New homes sounds good to potential buyers, but we already have lots of empty homes up north. I need a flat in central London close to work. Building a house in Kent for me isn’t good enough.

I could go on. This isn’t a proposal to fund high-quality construction in high-demand areas. It’s an aspiration intended to win votes while having no substance at all. Housing is a complex issue and there is no simple solution to the crisis. This policy addresses none of the concerns at all. It is merely intended to look like it.

While I’m here, I also need to address ‘help-to-buy’, another housing scheme that the manifesto promises to extend. Mortgage guarantees are ridiculous market distortions that any economic right-winger should abhor. If banks think the risk is too great without a guarantee, then that person probably shouldn’t have a mortgage! Guaranteeing a mortgage is basically a government subsidy to the banks; too many guaranteed mortgages will eventually default, as the banks’ careful risk analysis shows, the buyers will have paid mortgage interest for nothing, and the government will pick up the tab so that the banks don’t lose.

This is offering to make buyers feel good now in full knowledge that the buyers will actually lose out along with taxpayers. If the Conservatives think that banks’ risks analyses are wrong, that shows a distrust of big business curiously at odds with their usual attitudes.

Help-to-buy is a scheme designed to inflate house prices by helping people get into debts that they cannot afford. It will directly contribute to any future crash, and if it ‘helps’ enough people it will directly cause one.

In housing, where one might expect the Conservatives’ free-market economics to bring some sense to a distorted market, the Conservatives’ dedication to wealthy landowners actually makes them promise to distort the market further, in conflict with economic sense and their own principles.

The housing crisis is an enormous crisis, equivalent to roughly £100,000-£120,000 (estimates vary) transfer of wealth from the young (poor renters) to the old (rich house-owners). It is the single biggest injustice in the country, it is caused by market distortions that right-wing economics would usually hate, and the Conservatives are especially dedicated to making it worse.

Minimum pricing is wrong

http://www.bbc.co.uk/news/uk-scotland-22250584

As usual, I've been inspired by a news story. This one is a little argument over minimum pricing of alcohol. The Scottish government has apparently had inaccurate and biased submissions from the drinks industry, which opposes minimum pricing. This is hardly shocking. What is shocking is that governments continue to trust industry sources' information and opinions when looking into regulation of that industry.

That's not my subject for today. I want to express my revulsion for the concepts behind minimum pricing.
The argument is, as implied in the BBC news article, that low alcohol prices encourage drinking at home. People get hammered on their own, without the social pressure or regulation that they'd experience in a pub. Low alcohol prices supposedly also mean that people buy more alcohol (they have a set alcohol budget and buy as much as they can within that budget).
The correlation of negative effects with low alcohol prices are apparently indisputable, as is the direction of causation.

'Dr McCambridge said: "Our study showed that the alcohol industry, including both the producers and the big supermarkets, consistently oppose affective approaches to alcohol polices by misrepresenting strong evidence of what works. There is an international consensus in the research community that the approach of the Scottish government is the correct one." '

I suspect it's actually a spelling error, but the use of the word 'affective' is central to my point today. A minimum price may be effective (it has an effect), but it is also an emotional (affective) response that is incompletely thought-through.

I can't comment on the strength of the evidence over whether the harms of alcohol really are greater when it's cheaper. I do know that many alcoholics are relatively wealthy people who will continue to buy alcohol even if the minimum price is a bit higher, regulated by government. I suppose that minimum pricing is intended to hit the binge drinkers who stock up before a big night out.

However, these are not the only people who buy cheap alcohol. I know that binge-drinking is more prevalent amongst young people, but young people are also the ones who are poor and often buy cheap alcohol for moderate drinking; something to go with a meal with friends, or to have one drink whilst watching television in the evenings.
Minimum pricing will reduce these people's quality of life, not increase it. Meals with friends will cost more. Perfectly reasonable consumption will no longer be possible for their low level of income. Why should they be punished for the actions of others?

If we have a playpark that some children are drawing graffiti on, do we start charging an entrance fee? That will help keep away the poor children and the children with mean parents. No doubt children who wish to draw graffiti are mostly poorly supervised and are frequently from poorer backgrounds, and will not pay the entrance fee. So we will have protected the playpark, but at what cost? We will have rendered it a luxury for the rich and excluded legitimate use by poor or neglected children.

If a child in a class misbehaves and the teacher does not see who did it, he can hold the entire class behind. This neatly ensures that he does indeed punish the offender for the misbehaviour. But he also punishes the rest of the class for something that they did not do. This sort of injustice is called collective punishment and at an adult level is regarded as so offensive that it is banned by the Geneva Convention on Human Rights.
It is a fundamental part of law (both English and Continental, I think) that if the perpetrator of a crime cannot be identified or punished then the innocent shall not be punished as collateral damage. This I know because I recently listened to a very interesting discussion on the radio about prosecuting twins, and how they are often acquitted because of the inability to prove which of them comitted a crime.

So why, given this, do we think it perfectly acceptable to punish harmless purchasing of alcohol solely in order to make some alcohol abuse more expensive?

We should punish the offenders. When there is disorder in town centres, arrest and fine the offenders. When there is loud noise in residential areas, fine the offenders. Where a poor person is harmlessly drinking at home, fine the ... oh wait, why should this person pay more? An increase in price is collective punishment of those whose means do not stretch to casually consuming expensive products.
It's saying 'those poor people make all the trouble, so let's make them all pay for it'. It's based on grossly offensive tribal/class thinking, or possibly a simple lack of thought. Either way, it is unacceptable for researchers to recommend it, or for governments to implement it.

I do not care if utility is maximised by punishing the innocent. I do not care if the most solid economic research ever conducted shows that liver disease will be entirely eradicated by punishing the innocent. Economics and social science can show wonderful consequences for their interests (i.e the effect only on anti-social behaviour and alcoholic disease), but the consequences for others must be considered too, and must be given priority. An economist might say that this is an externality of the programme that must be internalised, but it's a specific type of externality. It does not affect just anyone else in society. This externality affects only poor drinkers. These sorts of discriminatory rules should be avoided, as it's impossible to recompense poor drinkers specifically.

This is not limited to minimum alcohol pricing. It's also relevant to the fat tax, which is even more pernicious because fat is healthy and necessary, and it's actually refined sugar that is more unhealthy. No matter which we tax, though, it's over-consumption that is the problem, not any form of consumption. Taxes punish those who do enough exercise to burn off their calories, or those who need the calories to power their exercise. By making exercising more expensive, a fat tax designed to promote health might reduce it, ensuring that the poor can only afford to be in mediocre health, not fit and active as is best.

Apart from a distinct inability to think of the wider consequences and escape the blinkers of thinking that a solution for a problem has no other effects, one cause of these ridiculous proposals is that the NHS must care for all people, but people's choices affect how much care they need. We have a destruction of accountability: we are not holding people accountable for their own health.
We need a safety net. Not all health issues are caused by the individual who suffers them, and a major function of society is to protect people from the mishaps and chance brutality of nature.

But some health problems are caused by the individual, and collective responsibility for such issues is wrong. By making the state pay for these problems, we encourage it to interfere with personal freedom in a bid to reduce its costs.
What we need is for these issues to cost a person money. We could charge people extra money for treatments of alcoholic liver disease and obesity-related heart disease. But we have made it a vital part of the NHS that it is free at the point of delivery (except dentistry, eye care, adult social care, sufficient physiotherapy and prescriptions).
There remains an alternative. We need an insurance system in which people pay for the risks they incur. Heavy drinkers would pay more as they drink, but not for the alcohol which can be consumed in moderation. They would pay for the 'heavy' part of heavy drinking. Obese people would pay for their over-consumption, rather than everyone paying for any form of consumption.
The only place where a tax works is smoking, because there is no safe limit. Smoking is always harmful, and so a tax is appropriate.

But where there are threshold effects, a blanket tax is unfair and disporportionately harms the poor. A minimum price only harms the poor. Neither is acceptable.

Imperfect markets

Markets are typically said to be the best way to distribute our resources. In general, I don't dispute this: I think that some necessities need to be distributed differently, to prevent poor people being priced out of the market, or to ensure coverage, but luxuries and items with plenty of substitutes suit markets well.
However, I do take issue with any suggestion that markets approach perfection, which is often assumed as axiomatic to economic theory. Markets cannot approach perfection. Perfect markets can approach perfection, but that's a tautology: we never deal with perfect markets.

This post is about the efficient market hypothesis, which I was reading about a couple of days ago during remedial GCSE maths (financial reporting work).
Weak efficiency is when prices can no longer be predicted from past movements. If they can be, then people are not acting on that possibility, which means that the price does not accurately reflect information. Prices should follow a 'random walk', in which each future movement is a new event.
Semi-strong efficiency is when prices incorporate all publicly available information.
Strong efficiency is when prices incorporate all information.
If markets are semi-strong efficient, inside information is required to beat the market.
If markets are semi-strong efficient or better, then someone with incomplete knowledge (i.e a human) should trust the market price instead of his own estimate of the price. The problem with this is that the market price is accurate precisely because it is an average of everyone's estimates, and therefore incorporates the information these people know. If one person free-rides on this accuracy, nothing changes, but when it becomes widely accepted that the market is right, information is removed from the estimate, which also becomes much more chaotic as everyone clusters around believing that the 'true' value is very close to the quoted market price, ensuring that small actions can have big effects. This is a double effect of the clustering of people's estimates and the removal of information. It will no doubt be exacerbated by the tendency of those with estimates furthest from the market price to doubt their information the most. Humans have an inbuilt fallacy called 'anchoring' which contributes to this.

Hence, if semi-strong or strong efficiency is accepted, it is rapidly lost by the free-rider problem of people taking advantage of the supposed information conveyed by the price. I have been told that this will be corrected by people who do know what is right taking the opportunity to make a profit, but this assumes that there is one person who knows accurately what the value is: the precise lack of which led to us creating the market in the first place. It also assumes that the market will self-correct. If there is a self-sustaining chaos, or movement away from the 'true' value, then any attempt to use knowledge will fail, being subject to chaos just like random bets.

Given this tendency of markets to degenerate to self-referential prices, there are two ways to beat the market: to use insider information in a semi-strong market, or to be lucky. In fact, if the market becomes self-referential, one can either invest in complex algorithms that predict human behaviour, in an attempt to understand how such self-referential human systems behave, or one can realise that the purpose of the market is no longer being served, and withdraw from it to start again.

Our big banks have, of course, gone for the complicated algorithm option.
So, why do we have hordes of speculators?

The solution would be to prevent the system being self-referential. We want a market that accumulates estimates and averages them, without these being biased by knowing the final result. We need to cut the feedback loop: the contributors to a market need to be blind to the price. That's a problem when the point of a market is to allow them to get a sensible and consistent price.
How else can we avoid the feedback loop that removes information? We can cut it through time, by delaying transactions until after bids, but delays come at a cost, and the next round in a continuous market will be affected by the last round no matter the timing.
In fact, we must tackle speculation itself: the ability to feed round the loop many times. We can't cut the loop perfectly, but if we make transactions cost, then following the loop round will incur a cost that will deter people who are not interested in what the market is for. This cost will hit legitimate users as well. We could also limit derivatives; these specifically refer to market price, and are therefore part of the self-referentiality of the market. Some are necessary, in order to deal with risk, but the freedom to overpower the market with them can disrupt the proper functioning of the market.
I would love to do a cost-benefit analysis of the liquidity added to the market for legitimate use weighed against the cost of greater market imperfection through self-reference. But sadly I don't know enough economics or maths.

Tertiary (/quaternary) thought

I've thought this for a very long time, but was triggered to write it down when describing my father's behaviour to a friend, and so of course thought to write it down more fully here too.

If I define what I mean by 'tertiary thinking' then readers will most likely guess the instances of it that bother me. Tertiary thinking is the habit of taking into account other people's responses to your actions when deciding what to do. I call it tertiary because it's the third step from the action; the first step is the action itself, the second another person's response to it, and so the third step is reconsidering the action in response to the person's predicted response. Obviously this can go on forever; it's a cycle of bluff, double-bluff, triple-bluff and so on that makes many strategic games of my youth games of chance: because two skilled players can see the best moves and must simply guess which the opponent will do. In this way, if we rank options in order we hit a game-theory problem: that the best option is to respond to the person's move and do a counter-move, but that the person will know you'll do that and will counter your move, so you counter that move instead... ad infinitum.

I’ll provide a couple of examples: firstly, as I just stated, this happens when playing games. If I want to capture a space that my opponent in a game controls, I will move towards it. But my opponent will see that his space is important, and defend it. Therefore my best option is to leave that space and take one or more less important spaces so that he has wasted his time defending somewhere that wasn’t attacked. But he knows this too, so he doesn’t defend the space. Therefore my best option is to attack the prized space.
The second example is more relevant to the contexts I am currently considering. There is a woman who wants me to cook dinner. I don’t want to cook dinner. She could ask me, but she knows that I don’t want to cook dinner and so she will only get her way half the time (in a sharing relationship). Because she knows I might refuse, she instead chooses to have a tantrum about something else. I will then respond to this tantrum by placating her, which will involve making dinner. So far, so normal. But actually, I don’t, because I know perfectly well that it’s her turn to make dinner, and so instead of her getting her way all the time, I still refuse to do things that I think it’s unfair for me to do. So as a response, she should stop having tantrums, because they’re a waste of time. However, she doesn’t, and we live through tantrums all the time.
    The two examples differ, in that one cannot reach an equilibrium, and the other does, but an unsatisfactory one. It is my experience that when people indulge in manipulation and are unsuccessful, they are especially unsatisfied, just as people who are manipulated are unsatisfied. Even an attempt at manipulation using positive actions is unfair, to my mind. A third example will illustrate. My aunt buys me a tasty chocolate box when I am staying with her. I am startled, but can hardly refuse a generous and tasty present. “Why thank-you, dearest Aunt”, I say. “I feel lazy tonight,” she replies “Would you do the cooking?”.
    The generous and thoughtful gift is suddenly no longer a kind gesture, but payment for a service to be rendered. The problem here, as with all manipulation using positive actions, is that my aunt has set both sides of the bargain. She chose that I would do the cooking, and chose what she would do in exchange. Bargains enforced by emotional blackmail are not optimal outcomes for me.

Now we know what tertiary thinking is, we can see a number of applications where it's an important concept: in financial markets, personal dealings and government policy.

Although I obviously first hatched the concept as a child, after thinking about the board games that my father taught me, I want to start with the most personal of the subjects I've mentioned here. In relationships (and not just sexual ones, but friendships too) it is very common for people to engage in tertiary thinking. My personal examples are perhaps best not described here, but it is probably easy for most people to recall an example for themselves. I can certainly imagine one: a person wants to go out with some friends, and the partner sets a deadline for return. Now if the partner wants the partier to come back at 11pm, the partner might say 9, in order to reach 11 as a compromise between 2am and 9pm.
Or a person might say "I'm fine" when she (stereotypically) is brewing an argument not because she means it but because she's saving it for a time more convenient to her. Or one might find someone saying "You don't care for me" when she means "I want my way", or perhaps "You should express your feelings more".
These examples are just a drop in the ocean of human interaction; I find that I see examples everywhere, in lots of small ways as well as these large and typically unpleasant examples. Describing these examples as unpleasant isn't very helpful, since I find almost every instance unpleasant. One final example is from the film I'm watching: Alien 3. Ripley refuses to tell the medical officer, who is her friend, about the alien, because she's worried about being judged. So she avoids his judgement by not giving him a chance.
We can easily spot some flaws in the principles that would lead to such behaviour. Firstly, and most importantly, I suppose, from a practical point of view, is that if one person can do it, then so can everyone else. When no-one is saying what he means, everyone loses touch with who thinks what, and no-one really knows each other, and communication and compromise are impossible, since no-one dares truly say what he thinks because that information is precious in the war to get his own way. Tertiary thinking turns human interaction into combat. That's hardly a way to feel close to people.
Secondly, it is inherently selfish. Accounting for someone's responses in order to get what you want does not show love or care for the other person. As I have just stated, it treats the other person as an enemy to be manipulated and fooled, not trusted. It might be used by people who claim that the other's actions are not demonstrating their feelings, but it is a very similar thing itself; it shows not an innocent person being hurt, but a selfish person being aggressive and manipulative.
Thirdly, it denies the agency of the other person. It shows an inability to trust them, or allow them to make their own decisions. In this way it is inherently aggressive, even though many instances might better be called 'passive-aggressive'. It certainly blends into emotional blackmail (http://en.wikipedia.org/wiki/Emotional_blackmail):
'Many of the people who use emotional blackmail are friends, colleagues and family members with whom we have close ties that we want to strengthen and salvage'  - parents, partners, bosses or lovers. No matter how much the blackmailer cares about the victim, they use their intimate knowledge to win compliance. '"My way or the highway" is the punisher's motto. No matter what you feel or need, punishers override you'. By contrast, 'self-punishers cast their targets in the role of the "grown-up" - the only  adult in the relationship...supposed to come running when they cry', while sufferers tack the position that 'if...you don't do what I want, I will suffer, and it will be your fault '. Finally for Forward and Frazier, 'Tantalizers are the most subtle blackmailers...offer nothing with a free heart'.

Knowing that the victim wants love or approval, blackmailers may threaten to withhold it or take it away altogether, or make the victim feel they must earn it. If the victim believes the blackmailer, he/she could fall into a pattern of letting the blackmailer control his/her decisions and behavior.'
It blends into emotional blackmail because it abuses people's desire for compromise; to show some goodwill and reach a balanced decision. Even in meetings of strangers, humans have a desire, either instinctive or culturally engrained, for co-operation (and for good reason; co-operation is vital for society).

Am I also condemning being thoughtful and tactful, when one keeps quiet about something, or speaks carefully, in order to spare another’s feelings? I don’t think that all instances of tact fall into this hateful category, and the reason is because they don’t abuse and control another person, lead to bad consequences if everyone does it, nor show selfishness or a lack of trust. Having described general differences, can we be more specific about how to distinguish between types of tertiary thought? Of course we can! The answer, perhaps lies in re-thinking my name for the problem. Tertiary thought isn’t really the problem at all! The problem is quaternary thought: the next step in the chain of action and response. The problem is not in allowing other people’s possible responses to control your behaviour, but trying to control other people’s behaviour.  So tertiary thought is a problem only when it goes a step further and is deliberately chosen in order to obtain a quaternary response, rather than, as in cases of tact, preventing a response by not divulging the information that would cause it.
Having made this distinction, I can expand the problem to include all even levels of the chain of action of response. It doesn’t matter if you consider a person’s response to your intended action, revise the action, consider the new response and repeat any number of times: it’s all manipulative if the end-point you’re using to judge your planned actions is someone else’s response to them, rather than what your actions might achieve themselves. I do think it’s worth distinguishing secondary thought, which involves no revision of your own action, from quaternary and above.  If I simply ask someone to do something in an open way I’m not being manipulative; it becomes manipulative and an abuse of the other’s status as a free agent when he doesn’t know that I want a certain action but I am attempting to make him do it. So I might adjust a request to be particularly polite if I know the person to be a stickler for manners, but the request is still open: he knows I want something from him, and so my politeness is more akin to tertiary thought, of allowing possible responses to control me, than to manipulation of others’ responses.
I am a straightforward person in person; I say what I mean and what I think, but not because I’m simple-minded. I have seemed like an easy target for manipulation by others, but have not been: I am straightforward because I like things that way, and I dislike conflict and emotional complexity, not because I can’t spot it or am bad at it. And so I get called stubborn, because that’s the only other way to adapt to manipulation: either you join in with the lies and attempted manipulation, or you simply refuse to play any sort of back-and-forth at all, whether it be genuine compromise or simply manipulation. Of course, I also have another motive, which is that I prefer to stick to principles than emotions anyway, and when it comes to principles I don’t like compromise anyway. Most people understand this notion when I say something like ‘I’d refuse to murder a person even if it would make the rest of the world happy’, and agree that compromising one’s principles is a bad thing. And yet when it comes to ‘I see no reason why I can’t have a good night out with my friends’ some people think that a girlfriend making enough of a fuss about it should be enough for me. If I ask why she finds the idea so terrible, I’m apparently a nasty person, whereas she, who wants to prevent me having a good time, is being wronged.
This specific example hasn’t really come up for me, but I know that it’s an example from enough people’s lives to resonate with them (and, if you swap girlfriend with boyfriend, with even more people). I wonder how one gets like that: does upbringing play a role? If people are unresponsive to direct requests, but give in to childish tantrums, do they inculcate this behaviour? How much has my (strict) upbringing interacted with my tendency to rationality and thought (rather than feeling) to make me particularly devoted to principles as the basis for actions rather than compromises involving feelings? The girl I knew certainly lacked insight into her vile behaviour, and so must have grown up with it as a perfectly acceptable part of her day-to-day life; it was her default way of interacting with people, and what she always used to get what she wanted. So it was what she tried when she wanted love, but very sadly it doesn’t control people’s feelings: only their actions. And since it’s a method of introducing conflict into relationships, it kills love rather than fostering it.

So we have a world of unpleasant and stubborn ‘sociopaths’, who have experienced manipulation and prefer to avoid it, scheming manipulators who can’t trust anyone and abuse others, either without insight or to battle others, and benighted suckers who go through their lives enabling everyone else’s lives rather than living their own.

It isn’t solely a problem in personal relationships. We have exactly the same problem at institutional levels, of which the most important is the relationship between politicians and the media. A politician might like to answer questions directly, but he knows that if he does give a straight ‘yes’ or ‘no’, even if he explains the answer and qualifies it, his thoughtfulness and all the exceptions will be ignored and the straight answer will be misinterpreted all across the media. The politician then gives complex and careful answers in which he devotes most of his brain power (minimal or not) to thinking about how to avoid traps, rather than dissecting the issue well. The journalists are starved of both silly splashes misinterpreting politicians and decent interviews expressing real opinions and politics, and so become more aggressive, and meanwhile the audience becomes ever more disillusioned with the wily and sly politicians. This relates to something I’ve mentioned before, which is how forgoing responsibility, even when there is no compulsion to be responsible, often has negative consequences. In this case the journalists who ignored a general rule to report on news, and instead started to create it by misquoting politicians, or focussing on small parts of their speech, sent the whole of politics into a downward spiral in exchange for a few cheap headlines.

Where else do we get this problem? Well, science suffers terribly from exaggeration. The field of thought that aims for unbiased assessment and logical detachment has ardent self-promotion at its centre. The numerous causes, from funding and career assessment, through to recognition and the chances of standing out amongst many, could be considered in an essay about this alone, but I think it worth saying that if you know that people will automatically subtract a set amount of certainty from whatever you express then in order to have them reach your desired level of belief in your research you simply over-emphasise the importance of your findings. If readers were better able to be scientific, and scepticism were better calibrated to the claims being made and the research supporting them, then there’d be less incentive for this. But now that it exists, if you want funding or to be published, you need to have something more spectacular to say than everyone else, and that means exaggerating more, in order to reach the ‘right‘ outcome of being competitive. It says a lot about humanity that we’ve managed to coat with lies the field of endeavour that seeks truth. We’ve corrupted it to human ends of making money, careers and social esteem and forgotten about the truth entirely. It’s a metaphor for every ideal that ever existed.

Did you think I’d finished, or had left politics behind? It’s not just the relationship between journalism and politics that suffers, but political discourse itself. Politicians have learned not only to fear sensationalism, but to use it. This gives us a tendency to extremism, and, where they can get away with it, simplistic analyses of situations that beguile supporters (and frustrate critics).

Politicians aren’t the only ones. The more we rely on responses, the more it seems acceptable. If it becomes too normal, we have people who think that the law should act in the same way. We start to have judgements responding to popular opinion that take into account emotional responses, whilst also purporting to be fair and just. Given that different people have different emotions, using them to determine a punishment, or whether a crime has been committed, can hardly be fair. I’ve been less than positive about emotions and their use in decision-making before, and said my piece more comprehensively there.

Finally, we come to economics, that makes the world go round. Free markets use the premise that individuals know what’s best for them. When it comes to stock markets, the premise is that crowds, by pooling their knowledge and putting a financial gain or loss on the knowledge, know better than any one individual, and each company is rated very accurately. Any one person can then gain an advantage by trusting the crowd more than his own, incomplete, knowledge. If more people trust the crowd, the sum of knowledge going into determining the price decreases, and markets become more volatile as more and more people respond to the changes as signifying wisdom. We get bubbles and other unpleasant consequences (economists are better placed to explain the problems of volatility than I am). Once again, it all comes from thinking about others’ responses (although in this case, not trying to control them). Where tertiary thinking turns bad we need either another stage of action and response, to turn into quaternary thinking, and trying to control a person, or we need a ‘game-theoretic’ approach in which there is a negative externality (this started as an economics paragraph, after all) to the benefit to be had by changing one’s response.

Humans have evolved big brains precisely because of the advantages of predicting others’ actions. And yet I don’t think that we should always employ this ability. An economist might ask how we could capture the negative externalities of the situations where it has bad consequences. I might ask how we stop people doing it (which are very similar questions). One way is to impose a social penalty on it. If people were to realise when someone else is using others, rather than their own abilities and exertions, and not give them funding, respect, headlines, votes or jobs on the trading floor, then I think it’d die down for a while. If, in personal relationships, people respond to manipulation with more of the same, the antagonism is destructive. If everyone were to adapt by being stubborn and not bending to emotional pressure, then perhaps we’d all learn to compromise using more sensible methods than manipulation, such as truth.

Isn’t it amazing where board games can take a child?

Efficiency

I grew up treasuring efficiency. I wanted the remote-controlled car that lasted longest, not the flashiest one (yes, I realise that's not necessarily the most efficient, but from a child's point of view in which charging is not a cost it is. It gave me the most time for each 'play'). I wanted games which I'd use a lot. And once I had something I used it. I was even known to choose sweets based on how long they took to eat, since there was no point in the expensive sherbet dips which took 2 seconds to eat.
It was an essential feature of who I was. Maybe that's why I turned to science; the concept of parsimony is simply requiring theoretical efficiency. I was good at efficiency. When we ran around the mountains to reach various markers I planned the route. No other group took our route, and we won comfortably (also due to running the 26 miles rather than hiking).
When we spent two lessons in geography not learning about either tectonics or flooding in Bangladesh, and tried to guess from maps where to put a big city for best resource use, or how to link a number of cities in the best network, I was almost interested in geography. Nowadays we have computer programmes that do this (via iterative methods: no-one's found a programme to solve this better), or else we use slime mould.
As I grew older, we got into more complex problems. When we were asked how we'd guess a fraction if we could only be told that it was higher or lower, a load of people were stumped because they didn't understand the question. One guy said he'd go up in 0.1 intervals. He was thinking of ruling out each decimal in turn on a calculator display screen. I rolled my eyes. I would always start with 0.5, then halve the possibilities each time. It needs fewer guesses, which saves time.

Enough of the background. You can all see that fewer guesses is a good thing if, for example, it's an integral part of a computer programme. We don't want to spend three times as long watching our computers process things because the programmes are inefficient. Efficiency is hugely important.
Why do we have markets? We have markets because, we're told, they're the most efficient way to distribute goods and services. History shows us that all alternatives that have been tried (at a state level) are indeed distinctly worse. Hooray for efficiency! I can buy what I want cheaply because everyone else wants one cheaply too.

So let's look at housing. Yes, it's a bit of a jump in subject. This country's housing stock is hugely inefficient, requiring the architectural intelligence and insight of a chimpanzee. We have the ability to design buildings that need neither air conditioning nor heating, because they create and use draughts and sunlight.
Instead we stick a load of bricks together (or perhaps embed some steel in some concrete and encase it all in glass) and call it modern. Spanish haciendas and the old stone churches needed more ingenuity!
I've mentioned the incredibly backward nature of housing before. It amazes me that in the modern world we have the ability to save resources (both natural resources and money: heating or air conditioning are a large proportion of running costs for most buildings) but we don't use them. It hurts deep inside. Efficiency, I love you much too much (http://www.youtube.com/watch?v=hcH-qRUvGlQ).

Well, I've clearly got a problem with housing. Thankfully, technology is used so much more in other industries, like... motoring?
I'm an efficient driver. In fact, when I started to learn, I was told that I was being dangerously efficient. I would coast everywhere, and we are told that it's best to have the engine engaged in order to have more control (and prevent safety mechanisms locking the steering wheel). I only really started leaving the engine engaged when my instructor told me that engine braking uses less fuel than an idling, disengaged engine (and saves brake wear). I love efficiency! Not for me the thrills of over-revving just for the sound, nor speeding right up to the junction only to brake hard.
We can make engines that run 40 mpg. We can even make vehicles that run 80 mpg. We can make vehicles so efficient that I could do the Oxford-Cambridge-London circuit with a quarter of a tank (rather than the half that I did use). We can fit more people into vehicles, and we even have specialised vehicles, called buses and trains, designed to do just this.

But do we? No.

Europeans are better at it than the wasteful Americans, who, despite needing to travel further, prefer their cars and engines huge and hugely wasteful. Not for me a money-saving, petrol-saving (gas-saving, for those of you not up with the hip lingo), world-saving vehicle. I'll waste my money on destroying the world, thank-you very much. I like the place that much. Well, with people like that around, I can sympathise.

We spend fortunes on paint jobs and bodywork, on getting the latest model and cleaning. Is any of this for efficiency? Do we improve the bodywork for better aerodynamics? Do we see that the latest model can squeeze out an extra few miles every day?
Do we do all this for comfort? Does the next model have a reclining, cushioned chair but our old one just the hard wooden seat? Sometimes convenience might play a part: a new CD player, better air conditioning, new upholstery, a gearbox that doesn't stick on 5th, but mostly this is all for one thing: style.
We waste money because we're buying respect. I don't know from whom these people are buying respect, because I can't see the reasons for admiring desperation and waste.

In fact, the more look around many industries, the more waste we see. People buy guzzling engines, cheap light bulbs, inefficient homes and refrigerators, endless new clothes etc. I can't really complain about some effects of fashion, like bars that charge as much for a measure spirits as the whole bottle costs. It's frustrating if people I know want to go there 'because it's nice', but it's a different issue.
This drive to waste is an inherent quality of capitalism. This is hardly a new observation: we've had complaints about consumption and consumerism for decades. Why does capitalism value short-term interests?
Firstly, the mobility of capital, and the nature of the stock market, means that at any one moment investors want to see an immediate improvement in stock values. They can sell when they want, and invest elsewhere, so if they have to wait, they won't.
Secondly, people have problems with future-discounting. They don't buy a product that costs twice as much and will last ten times as long. Having wealth now is given disproportionate value over wealth in the future. Maybe this is a psychological trait we have because of the nature of nature: life is nasty, brutish, uncertain and short. However, we don't live in nature any more, and life is more dependable. You can depend on regretting frittering your money away pointlessly.
Thirdly, at the intermediate level, companies have no incentives to prioritise long-term plans. Companies are run by individuals. They need make an immediate, individual impact, in order to be promoted (or not get fired). They need to get things done now. If you judge people on a month's results, but it takes a year to form a good relationship with a customer through friendly and efficient provision of follow-up services, then you'll have very pushy and unfriendly staff. CEOs can sack hordes of staff to cut costs and leave the company before it runs itself into the ground.
Of course, not all capital is as mobile. Those who can't keep up lose. Private investors and ponderous pension funds invest for the longer-term, fighting the other pressures to short-term considerations. When short-term considerations are given priority, long-term investors lose, along with everyone who has long-term interests: the workforce, customers (whose customer service might suffer if a company fails) and related business that work with that company (and have invested in future business). And who gets their money out first when a company goes under? Is it done under a length-of-investment basis, so that those who put their money in first get something? No, because that might lead to pyramid schemes (even though these are outlawed separately). Is it those with business relations? No, it's the big lenders. It's the people who invest short-term and could have bought the debt the day before. So there's even more reason that big banks with short-term investment outlooks thrive. We even have supercomputers buying and selling within fractions of a millisecond of each other. That hardly seems like a useful activity. The big banks make money, and we need to ask ourselves where this money comes from. Is it enough to say 'well, they pay taxes, so it's alright' (leaving aside their ingenious tax avoidance schemes which become so much more worthwhile when done on behalf of enormous amounts of capital)? If they're a tax on business itself, it's no good to allow it because some of the money goes to the exchequer. When businesses fail because of stock market games, employees and medium lenders lose out. When a stock-market investor makes money, it must come from somewhere. Do we, as a society, think that the supposedly more efficient distribution of capital is worth this tax of greed that costs billions of pounds?

That's enough getting side-tracked. The point is that capitalism is geared for as short-term an outlook as possible. This is partly because people are that way too. But we expect our societies to be run with some consideration for the future. So government needs to step in and impose long-term considerations. Not just environmental externalities, but incentives for people to make sensible long-term decisions.
We wouldn't be in a mess if people actually cared about efficiency and sustainability. Capitalism can never fully value efficiency of the sort I'd naturally want to value, because efficiency gains in resource management will always be outweighed by efficiency in resource consumption. Why make it stretch further when it's cheaper to use more?
The only time capitalism can value efficiency is when there's nothing left to consume. By it's nature it can't account for finite resources until they are gone, which is the height of stupidity. We need a hefty penalty on taking things that can't be replaced. Not just an environmental penalty because most of these things generate pollution, but a penalty that takes into account the incredible externalities of depriving everyone in the future of using that good for any and every possible future use.
Since we don't even know all the possible future uses of any good, the penalties need to be large to allow for possible very useful uses. That's efficiency. Why is it good to burn as much as possible now? If they knew what underlies modern economies, would most people really accept the sort of nihilism that says the future has no rights and that destroying the planet now is acceptable if it gets us better lives for a day or two?

I want to see futuristic houses where the draughts are treasured parts of the architecture. I want to see a world where the amazing insights in mathematics are applied to everyday problems; where we travel in electric cars and have oil left to make plastics. But long-term visions require planning, and if you mention planning, you raise the dread shadow of state-planning and control, feared before anyone even sees what it actually looks like.

So we're stuck with the belief that out of chaos comes order. It's true; evolution proves the tautology that things that best survive survive best. Until a shock, like running out of resources, or meeting something new. Evolution shows that the order from chaos is only responsive, and never predictive. The dodo, the dinosaurs, the kiwi... there are endless examples of the losses incurred by the 'it'll work out without interference' attitude.
But not bothering to anticipate the future is incredibly inefficient. If we only ever respond, we'll always lag behind, dragged along by the forces we create. We need to get cleverer. We need efficiency.

Where can we find it? State planning is dead, a catastrophic failure, like the introduction of the cane toad. An impossibility that is too complex ever to work. Wait! What? We don't understand the problem well enough, so we dismiss it, but when it comes to problems like what to do when the resources run out we're told 'we'll solve it, even though we haven't yet'. I detect some bias in the levels of optimism.

As it happens, I think we should have great optimism about state interventions. The cane toad was a failure in adjusting complex market-like systems, but there have been hundreds of successful instances of biological control since then. Our understanding improved, and so did our success rate. Biology is leading the way. We just need economists and politicians to follow.