[bko]

A price is a signal and serves as incentive to produce the good. Setting an arbitrary low price for anything is a bad idea.

> If you want to "let the market fix it", poor people won't be able to afford electricity.

If you want to give poor people electricity, just give them money which they can use for electricity or whatever else they may need. The solution isn't to pretend that electricity is cheaper than it is. Not only does it create issues like miners exploiting the system, but it also encourages wasteful uses of electricity, removes a valuable market signal and removes autonomy of those poor people you're trying to help. Maybe they would trade off some electricity for better housing. Instead you're making the decision for them.

[radu_floricica]

Thanks for saying that. "Give them money" may not be the most optimum solution, but it's nearly always the most practical. Not only is it least likely to lead to unwanted side effects, it's actually most likely to generate positives ones.

If you're allowed to decide how to spend your money, you're likely to do a lot of low-hanging-fruit stuff that you wouldn't otherwise, like fix that windy window frame. No governmental program can even come close to this efficiency - they'd just do a "thermal reabitation" on the whole building, which will be 50% better and 900000% more expensive.

The reason giving money works so well is that it is both very flexible, and uses a huge information advantage - each person knows their situation better than the government. It's not about gov being inefficient (tho they may be) it's that it's incapable in principle of approaching the efficiency of "give them money".

[retrac]

It's not just a problem faced by governments. It shows up with charity too.

Small cash transfers may be one of the most effective form of poverty relief in politically stable poor countries with at least a nascent market economy. In a peer-reviewed trial in Kenya it was found to have substantial positive effects on the local economy: https://en.wikipedia.org/wiki/GiveDirectly#Basic_income_expe...

One of the most common uses of the funds was buy galvanized roofing. It's very expensive compared to thatching up front, but lasts a lifetime and eliminates both the labour and material costs for ongoing maintenance.

That would never have occurred to me. If I had wanted to help them with in-kind donations, I may well have sent something relatively much less useful, lacking awareness of their local context. Very real risk of sending coals to Newcastle, there.

I know that in some developed countries, organizations like food banks also run into this. People will donate food in-kind, but most food banks would rather receive cash to have flexibility in addressing needs as they arise.

[mijamo]

What would happen in reality is poor people would steal electricity and the whole system would collapse, which is what has happened in many places many time before and is still happening in many places. It's not like it's hard to draw a few cables.

Also "just give money to people" in systems with very poor and sometimes corrupted administrations is a very sure way of ensuring poor people get nearly nothing and it all gets siphoned in the pockets of not very nice people.

[drdeca]

Would "give poor people electricity credits (denominated in the currency) which can be redeemed by the electrical companies (and not anyone else) for actual money" be viable and help avoid the corrupt admins siphoning the money?

[radu_floricica]

It's the same as subsidizing electricity. Giving them cash allows for completely new and specific solutions, in a huge variety of forms. Better insulation. Switching to cheap heat pumps. Pooling cash together for a scaled-up approach - even if it's just family moving together. Not heating during the day. Accepting a lower temperature and using the funds for something else. Getting a credit for a more expensive fix.

Subsidizing electricity, directly or indirectly, is an incentive to do exactly nothing. Power is cheap, so you use it to heat the house - period. Any move to be more energy efficient doesn't make sense.

[drdeca]

Oh, I of course agree that in general (in the absence of reasons like corruption that would make this not work as well as it should) it is preferable to just give cash. I'm saying specifically as a means to route around corruption that would steal the cash if you attempted to simply give cash.

And, while it is a subsidy of one sort of electricity, it is, I think, not the same as other possible subsidies which simply try to keep the price down.

(terminology : when I say constant-across-people I mean that the number for each person at any given time is the same, but what this number is may change over time, and possibly frequently)

Specifically, instead of the state using a subsidy to pay for a constant-across-people fraction of all electricity costs, it would instead be paying, for each person, a constant-across-people additive amount of electricity costs.

I of course agree that this still distorts the market signals somewhat, but I think it is substantially less, and, in particular, avoids most of the issues of "being a place where electricity is super cheap, where people will therefore try things that require very large quantities of electricity", because, after the relatively small amount of electricity which is free-for-consumers, the price beyond that point is not artificially cheap (and may instead actually be a bit more expensive than would be natural, because of the artificial demand increase caused by the credits).

I'm not an economist, but I think that seems like it would be substantially less distortion-causing than the state paying a constant-across-people fraction of the price in order to keep the price-to-consumers below a given threshold.

[radu_floricica]

TBH, I don't particularly get how it would be stolen through corruption. I mean cash payments are pretty straightforward - either you get it or you don't, and people are pretty incentivized to make sure they get the money. It'd be the same as stealing pensions or children allocations.

You have an algorithm which says who gets energy allocations - and it really doesn't matter if it's approximate, as long as you notify who gets the money. Then you sent the money, and people will make a lot of noise if they don't get it. Sure, the algorithm won't be perfect, but people have a clear way of giving feedback: "I'm not getting money and should", or "I'm not included and think I should be because I'm poor". Just two failure modes, both clear.

Compare this to the totally opaque way energy subsidies work. Government postulates that prices should stay the same, then talks behind closed doors with a handful of companies and gives them a completely non-transparent amount of money that may or may not have anything to do with the price difference. I can probably think of 6 ways in 6 minutes on how this can be exploited.

[watwut]

This is downvoted, but afaik both actually happened.