- Solar is a market for (financial) lemons: Our Slow AIs have an alignment problem.
- Hey look at this: Delights to delectate.
- This day in history: 2004, 2009, 2014, 2019
- Colophon: Recent publications, upcoming/recent appearances, current writing projects, current reading
Solar is a market for (financial) lemons (permalink)
Rooftop solar is the future, but it's also a scam. It didn't have to be, but America decided that the best way to roll out distributed, resilient, clean and renewable energy was to let Wall Street run the show. They turned it into a scam, and now it's in terrible trouble. which means we are in terrible trouble.
There's a (superficially) good case for turning markets loose on the problem of financing the rollout of an entirely new kind of energy provision across a large and heterogeneous nation. As capitalism's champions (and apologists) have observed since the days of Adam Smith and David Ricardo, markets harness together the work of thousands or even millions of strangers in pursuit of a common goal, without all those people having to agree on a single approach or plan of action. Merely dangle the incentive of profit before the market's teeming participants and they will align themselves towards it, like iron filings all snapping into formation towards a magnet.
But markets have a problem: they are prone to "reward hacking." This is a term from AI research: tell your AI that you want it to do something, and it will find the fastest and most efficient way of doing it, even if that method is one that actually destroys the reason you were pursuing the goal in the first place.
For example: if you use an AI to come up with a Roomba that doesn't bang into furniture, you might tell that Roomba to avoid collisions. However, the Roomba is only designed to register collisions with its front-facing sensor. Turn the Roomba loose and it will quickly hit on the tactic of racing around the room in reverse, banging into all your furniture repeatedly, while never registering a single collision:
This is sometimes called the "alignment problem." High-speed, probabilistic systems that can't be fully predicted in advance can very quickly run off the rails. It's an idea that pre-dates AI, of course – think of the Sorcerer's Apprentice. But AI produces these perverse outcomes at scale…and so does capitalism.
Many sf writers have observed the odd phenomenon of corporate AI executives spinning bad sci-fi scenarios about their AIs inadvertently destroying the human race by spiraling off in some kind of paperclip-maximizing reward-hack that reduces the whole planet to grey goo in order to make more paperclips. This idea is very implausible (to say the least), but the fact that so many corporate leaders are obsessed with autonomous systems reward-hacking their way into catastrophe tells us something about corporate executives, even if it has no predictive value for understanding the future of technology.
Both Ted Chiang and Charlie Stross have theorized that the source of these anxieties isn't AI – it's corporations. Corporations are these equilibrium-seeking complex machines that can't be programmed, only prompted. CEOs know that they don't actually run their companies, and it haunts them, because while they can decompose a company into all its constituent elements – capital, labor, procedures – they can't get this model-train set to go around the loop:
Stross calls corporations "Slow AI," a pernicious artificial life-form that acts like a pedantic genie, always on the hunt for ways to destroy you while still strictly following your directions. Markets are an extremely reliable way to find the most awful alignment problems – but by the time they've surfaced them, they've also destroyed the thing you were hoping to improve with your market mechanism.
Which brings me back to solar, as practiced in America. In a long Time feature, Alana Semuels describes the waves of bankruptcies, revealed frauds, and even confiscation of homeowners' houses arising from a decade of financialized solar:
The problem starts with a pretty common finance puzzle: solar pays off big over its lifespan, saving the homeowner money and insulating them from price-shocks, emergency power outages, and other horrors. But solar requires a large upfront investment, which many homeowners can't afford to make. To resolve this, the finance industry extends credit to homeowners (lets them borrow money) and gets paid back out of the savings the homeowner realizes over the years to come.
But of course, this requires a lot of capital, and homeowners still might not see the wisdom of paying even some of the price of solar and taking on debt for a benefit they won't even realize until the whole debt is paid off. So the government moved in to tinker with the markets, injecting prompts into the slow AIs to see if it could coax the system into producing a faster solar rollout – say, one that didn't have to rely on waves of deadly power-outages during storms, heatwaves, fires, etc, to convince homeowners to get on board because they'd have experienced the pain of sitting through those disasters in the dark.
The government created subsidies – tax credits, direct cash, and mixes thereof – in the expectation that Wall Street would see all these credits and subsidies that everyday people were entitled to and go on the hunt for them. And they did! Armies of fast-talking sales-reps fanned out across America, ringing dooorbells and sticking fliers in mailboxes, and lying like hell about how your new solar roof was gonna work out for you.
These hustlers tricked old and vulnerable people into signing up for arrangements that saw them saddled with ballooning debt payments (after a honeymoon period at a super-low teaser rate), backstopped by liens on their houses, which meant that missing a payment could mean losing your home. They underprovisioned the solar that they installed, leaving homeowners with sky-high electrical bills on top of those debt payments.
If this sounds familiar, it's because it shares a lot of DNA with the subprime housing bubble, where fast-talking salesmen conned vulnerable people into taking out predatory mortgages with sky-high rates that kicked in after a honeymoon period, promising buyers that the rising value of housing would offset any losses from that high rate.
These fraudsters knew they were acquiring toxic assets, but it didn't matter, because they were bundling up those assets into "collateralized debt obligations" – exotic black-box "derivatives" that could be sold on to pension funds, retail investors, and other suckers.
This is likewise true of solar, where the tax-credits, subsidies and other income streams that these new solar installations offgassed were captured and turned into bonds that were sold into the financial markets, producing an insatiable demand for more rooftop solar installations, and that meant lots more fraud.
Which brings us to today, where homeowners across America are waking up to discover that their power bills have gone up thanks to their solar arrays, even as the giant, financialized solar firms that supplied them are teetering on the edge of bankruptcy, thanks to waves of defaults. Meanwhile, all those bonds that were created from solar installations are ticking timebombs, sitting on institutions' balance-sheets, waiting to go blooie once the defaults cross some unpredictable threshold.
Markets are very efficient at mobilizing capital for growth opportunities. America has a lot of rooftop solar. But 70% of that solar isn't owned by the homeowner – it's owned by a solar company, which is to say, "a finance company that happens to sell solar":
And markets are very efficient at reward hacking. The point of any market is to multiply capital. If the only way to multiply the capital is through building solar, then you get solar. But the finance sector specializes in making the capital multiply as much as possible while doing as little as possible on the solar front. Huge chunks of those federal subsidies were gobbled up by junk-fees and other financial tricks – sometimes more than 100%.
The solar companies would be in even worse trouble, but they also tricked all their victims into signing binding arbitration waivers that deny them the power to sue and force them to have their grievances heard by fake judges who are paid by the solar companies to decide whether the solar companies have done anything wrong. You will not be surprised to learn that the arbitrators are reluctant to find against their paymasters.
I had a sense that all this was going on even before I read Semuels' excellent article. We bought a solar installation from Treeium, a highly rated, giant Southern California solar installer. We got an incredibly hard sell from them to get our solar "for free" – that is, through these financial arrangements – but I'd just sold a book and I had cash on hand and I was adamant that we were just going to pay upfront. As soon as that was clear, Treeium's ardor palpably cooled. We ended up with a grossly defective, unsafe and underpowered solar installation that has cost more than $10,000 to bring into a functional state (using another vendor). I briefly considered suing Treeium (I had insisted on striking the binding arbitration waiver from the contract) but in the end, I decided life was too short.
The thing is, solar is amazing. We love running our house on sunshine. But markets have proven – again and again – to be an unreliable and even dangerous way to improve Americans' homes and make them more resilient. After all, Americans' homes are the largest asset they are apt to own, which makes them irresistible targets for scammers:
That's why the subprime scammers targets Americans' homes in the 2000s, and it's why the house-stealing fraudsters who blanket the country in "We Buy Ugly Homes" are targeting them now. Same reason Willie Sutton robbed banks: "That's where the money is":
America can and should electrify and solarize. There are serious logistical challenges related to sourcing the underlying materials and deploying the labor, but those challenges are grossly overrated by people who assume the only way we can approach them is through markets, those monkey's paw curses that always find a way to snatch profitable defeat from the jaws of useful victory.
To get a sense of how the engineering challenges of electrification could be met, read Macarthur fellow Saul Griffith's excellent popular engineering text Electrify:
And to really understand the transformative power of solar, don't miss Deb Chachra's How Infrastructure Works, where you'll learn that we could give every person on Earth the energy budget of a Canadian (like an American, but colder) by capturing just 0.4% of the solar rays that reach Earth's surface:
But we won't get there with markets. All markets will do is create incentives to cheat. Think of the market for "carbon offsets," which were supposed to substitute markets for direct regulation, and which produced a fraud-riddled market for lemons that sells indulgences to our worst polluters, who go on destroying our planet and our future:
We can address the climate emergency, but not by prompting the slow AI and hoping it doesn't figure out a way to reward-hack its way to giant profits while doing nothing. Founder and chairman of Goodleap, Hayes Barnard, is one of the 400 richest people in the world – a fortune built on scammers who tricked old people into signing away their homes for nonfunctional solar):
If governments are willing to spend billions incentivizing rooftop solar, they can simply spend billions installing rooftop solar – no Slow AI required.
Hey look at this (permalink)
- Months After Merging With Activision, Microsoft Lays Off Gaming Employees https://prospect.org/labor/2024-01-26-microsoft-lays-off-gaming-employees/
The Living New Deal Map https://livingnewdeal.org/map/ (h/t Waxy)
Ex-sheriff’s deputy behind SF jail ‘fight club’ scandal to be rehired https://missionlocal.org/2024/01/sf-rehire-ex-sheriffs-deputy-fight-club-scandal/ (h/t JWZ)
This day in history (permalink)
#20yrsago NYT discovers the “Plam Pilot” phenomenon https://memex.craphound.com/2004/01/28/nyt-discovers-the-plam-pilot-phenomenon/
#20yrsago Irish ISP will disconnect Internet users after three unsubstantiated copyright claims https://memex.craphound.com/2009/01/28/irish-isp-will-disconnect-internet-users-after-three-unsubstantiated-copyright-claims/
#15yrsago Ryanair will fine passengers who board with too much carry-on https://gadling.com/2009/01/22/ryanair-to-ticket-passengers-who-try-to-cheat-the-baggage-system/
#15yrsago BBC promises to put 200,000 publicly owned oil paintings online by 2012 https://www.theguardian.com/media/2009/jan/28/bbc-digitalmedia
#10yrsago Gartner Hype Cycle on the Gartner Hype Cycle https://twitter.com/philgyford/status/427840025544650753
#10yrsago Makerspaces and libraries: two great tastes that taste great together https://medium.com/the-magazine/shifting-from-shelves-to-snowflakes-d2a360c7ac7b
#10yrsago Pope Francis on the Internet and communication https://www.hyperorg.com/blogger/2014/01/27/a-gift-from-god/
#10yrsago UK National Museum of Computing trustees publish damning letter about treatment by Bletchley Park trust https://web.archive.org/web/20140130143734/https://www.tnmoc.org/news/news-releases/deciphering-discontent-statement-tnmoc-trustees
#10yrsago What is exposed about you and your friends when you login with Facebook https://twitter.com/TheBakeryLDN/status/427531934294880256
#10yrsago 890 word Daily Mail immigrant panic story contains 13 vile lies https://web.archive.org/web/20140126081130/http://britishinfluence.org/13-reasons-taking-daily-mail-press-complaints-commission/
#5yrsago Bride attains virality by adding pockets to her dress and those of her bridesmaids https://metro.co.uk/2019/01/27/bride-added-pockets-wedding-dress-bridesmaids-dresses-8398183/
#5yrsago Grifter steals dead peoples’ houses in gentrifying Philadelphia by forging deed transfers, then flipping them https://www.inquirer.com/news/a/house-sales-fraud-theft-philadelphia-real-estate-dead-owners-william-johnson-20190124.html
#5yrsago Megathread of Facebook’s terrible, horrible, no-good eternity https://brucesterling.tumblr.com/post/182371861433/all-things-facebook
#5yrsago How Facebook tracks Android users, even those without Facebook accounts https://www.youtube.com/watch?v=y0vlD7r-kTc
#5yrsago Video and audio from my closing keynote at Friday’s Grand Re-Opening of the Public Domain https://archive.org/details/ClosingKeynoteForGrandReopeningOfThePublicDomainCoryDoctorowAtInternetArchive_201901
Today's top sources: Naked Capitalism (https://www.nakedcapitalism.com/).
- A Little Brother short story about DIY insulin PLANNING
Picks and Shovels, a Martin Hench noir thriller about the heroic era of the PC. FORTHCOMING TOR BOOKS JAN 2025
The Bezzle, a Martin Hench noir thriller novel about the prison-tech industry. FORTHCOMING TOR BOOKS FEB 2024
Vigilant, Little Brother short story about remote invigilation. FORTHCOMING ON TOR.COM
Spill, a Little Brother short story about pipeline protests. FORTHCOMING ON TOR.COM
Latest podcast: What kind of bubble is AI? https://craphound.com/news/2024/01/21/what-kind-of-bubble-is-ai/
- The Lost Cause at Otherland (Berlin), Jan 28
Marshall McLuhan Lecture 2024 (Berlin), Jan 29
The Lost Cause at Otherland (Berlin), Jan 30
The Bezzle at Third Place Books (Seattle), Feb 26
Tuscon Festival of Books, Mar 9/10
- Enshittification: The Rise and Fall of Big Tech (Crash Course Economics)
Generation of Lost Causes with Vass Bednar (Toronto Public Library)
Low-Key Clippy (This Week In Tech)
- "The Lost Cause:" a solarpunk novel of hope in the climate emergency, Tor Books (US), Head of Zeus (UK), November 2023 (http://lost-cause.org). Signed, personalized copies at Dark Delicacies (https://www.darkdel.com/store/p3007/Pre-Order_Signed_Copies%3A_The_Lost_Cause_HB.html#/)
"The Internet Con": A nonfiction book about interoperability and Big Tech (Verso) September 2023 (http://seizethemeansofcomputation.org). Signed copies at Book Soup (https://www.booksoup.com/book/9781804291245).
"Red Team Blues": "A grabby, compulsive thriller that will leave you knowing more about how the world works than you did before." Tor Books http://redteamblues.com. Signed copies at Dark Delicacies (US): and Forbidden Planet (UK): https://forbiddenplanet.com/385004-red-team-blues-signed-edition-hardcover/.
"Chokepoint Capitalism: How to Beat Big Tech, Tame Big Content, and Get Artists Paid, with Rebecca Giblin", on how to unrig the markets for creative labor, Beacon Press/Scribe 2022 https://chokepointcapitalism.com
"Attack Surface": The third Little Brother novel, a standalone technothriller for adults. The Washington Post called it "a political cyberthriller, vigorous, bold and savvy about the limits of revolution and resistance." Order signed, personalized copies from Dark Delicacies https://www.darkdel.com/store/p1840/Available_Now%3A_Attack_Surface.html
"How to Destroy Surveillance Capitalism": an anti-monopoly pamphlet analyzing the true harms of surveillance capitalism and proposing a solution. https://onezero.medium.com/how-to-destroy-surveillance-capitalism-8135e6744d59?sk=f6cd10e54e20a07d4c6d0f3ac011af6b) (signed copies: https://www.darkdel.com/store/p2024/Available_Now%3A__How_to_Destroy_Surveillance_Capitalism.html)
"Little Brother/Homeland": A reissue omnibus edition with a new introduction by Edward Snowden: https://us.macmillan.com/books/9781250774583; personalized/signed copies here: https://www.darkdel.com/store/p1750/July%3A__Little_Brother_%26_Homeland.html
"Poesy the Monster Slayer" a picture book about monsters, bedtime, gender, and kicking ass. Order here: https://us.macmillan.com/books/9781626723627. Get a personalized, signed copy here: https://www.darkdel.com/store/p2682/Corey_Doctorow%3A_Poesy_the_Monster_Slayer_HB.html#/.
- The Bezzle: a sequel to "Red Team Blues," about prison-tech and other grifts, Tor Books, February 2024
Picks and Shovels: a sequel to "Red Team Blues," about the heroic era of the PC, Tor Books, February 2025
Unauthorized Bread: a graphic novel adapted from my novella about refugees, toasters and DRM, FirstSecond, 2025
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"When life gives you SARS, you make sarsaparilla" -Joey "Accordion Guy" DeVilla