(Some reasons why it hasn't been working as well
as it could be and how the problems can be cured.)
Ignorance, Stupidity, and Greed
In ancient Persia, long before what is known as the time of Christ, people were making ice in the desert through evaporative cooling and storage techniques. They also used water, rocks, sand, heat, and wind to condition and move air so that their buildings were cool during hot times and warm during cool times. Today, the old technology is known only by a few, and the actual figures used by engineers for accurately implementing this technology are either not known or not widely published. Consequently, we are often duped into using energy that creates unnecessary expenses, excessive pollutants, and excessive carbon dioxide emissions. However, it is our outmoded system of incentives that allows this state of ignorance and gullibility to continue.
Furthermore, in an age where computers can use very little energy, the old
technology can be better implemented than ever before - provided those who
design our buildings will bother to use such methods as either primary or
secondary systems.
On March 24, 1983, while I was working for the Pacific Telephone Company, I made some notes on a new building that a very talented engineer and myself as the coordinator had been working on for some time. The concept was to create a commercial building that would use less than 10% of the energy normally used for a building of its size and type. The name of the new building would be the Napa Field Operating Center (FOC). My notes were as follows.
Napa - electrical charges by PG&E - $3.00 per month plus 10.438 cents per kilowatt hour.
Napa Field Operating Center (FOC) - 5 horsepower (HP) supply (2.4 HP low, 4.2 HP high)
1/3 HP exhaust fan for skylights (.2 HP operating)
Heaters: EDH-1 12 Kilowatts (KW), EDH-2 27 Kilowatts (KW)
Heat pump in conference room: Cool 3.63 KW, Heat 2.79 KW
Using 736 KW/HP at 100% efficiency, actual of 1000 KW at
normal efficiency/HP:
minimum load 2.4 KW, maximum about 42 KW
(24 hours)(30 days)(2.4 KW)($.10438) + $3.00 = $183.37/month
(24)(30)(42)(.10438) + 3 = $3,160.00 maximum
Lights: about 2 KW inside for 12 hours maximum
about 6 KW outside for night only
If 2.4 KW fan cycles, bill drops to $90
Lights about 8 hours/day on dim day $"0" on bright 0
Total per day, $90
Max heat: 4.2 for supply fan plus 39 for heaters + 3 for heat pump equals 46.2
3 for light for 8 hours
(46.2)(8 hours/2)(30)(.10438) = $578.00 for heat
(3)(8)(30)(.10438) = $75.00 for light
Comes to $653.00 maximum
Exterior lights (6)(8)(30)(.10438) = $225.00 for whole yard
Construction Costs:
Rock is 1 inch river run (round) "salt & pepper".
8'x12'x20 rock bed - 100 tons - total cost $4,000
Square Feet:
Envelope is about 8,390 square feet
Loading ramp 58'x25' = 1,450 square feet
Covered storage 4,554 square feet
Inside w/o heat or A/C 3,306 square feet
Rock bin and plenum 40x23 = 920 square feet
Treated office area 9,390 square feet
Total comes to 18,620 square feet
This project required two very lengthy tries to persuade higher management to
approve it. As I recall the total time for approval (through opposition)
took over four years. Then there was a year or more for design and
construction. Finally, the building was constructed and turned over
to the Plant Department. The following news release was composed by
our public relations expert.
Pacific Telephone this week officially "took off the wraps" at its energy-efficient Field Operating Center in the Napa Valley Business Park.
Located on a seven-acre site near Kelly Road, the $2.1 million facility consists of office and storage space totaling 17,200 square feet plus a 4,000 square foot garage and equipment building. It serves as headquarters for some 100 employees responsible for construction, maintenance and repair functions throughout Napa and Solano Counties.
Consistent with Pacific Telephone's energy conservation program established more than 10 years ago, the new complex incorporates numerous energy-saving features. The environmental considerations include large, automatically-controlled skylights for heating and cooling energy and a variable air flow system to recirculate hot and cold air as needed.
In addition, several passive energy-saving features have been included. Landscaped earth berms have been constructed around the building's exterior walls, allowing for more natural warmth in winter and cutting glare and radiated heat from the pavement during summer. Taking advantage of the seasons and the direction of the sun, lower-hanging eaves protect the interior from direct sunlight when it's hot but allow for increased heating during the colder months. Finally, the facility is insulated far beyond industry standards; the ratings of R11 for walls and R19 for ceilings have been upgraded to R19 and R38 respectively.
On average, the Napa Field Operating Center is expected to cost Pacific Telephone about $90 per month for heating, cooling, and lighting. A similar facility incorporating only passive energy-saving features such as thicker insulation would cost $450 per month.
Pacific Telephone General Manager, Norm Phillips, explained the company's ongoing energy conservation program has resulted in huge savings statewide.
"In the past five years," he said, "we have modified the heating, cooling, and lighting systems in more than 1,100 buildings in California and Nevada for an energy savings of $56 million."
"By 1985," he added, "the savings will total $105 million, and continue to grow as energy costs keep rising."
Fact Sheet
Contractor: Mid-State Construction of Sausalito, California.
Architects: Liske, Lionakis, Beaumont, and Engberg of Sacramento, California.
Building Design: Contemporary
Parking: Grounds will accommodate 130 employee automobiles and 128 Company Vehicles.
Rock Bed Storage: 100 tons of river rock contained within 8'x12'x20' compartment
to retain heating and cooling energy.
Note that very little mention of the rock bed and its role is to be found in the news release even though the rock bed was the heart of the heating and cooling system. Cooling the rocks at night during the summer and heating them during the day during the winter required the use of an inexpensive computer and some fans. Rocks are inexpensive and low on maintenance as compared to the usual high-energy heat pump or air conditioning systems which the rock bed replaced.
In spite of dire predictions from those who wanted us to fail, the construction costs of this system were well below that of the usual contemporary designs. In the years that followed, the actual operating costs for the building turned out to be less than 10% of the operating costs of similar buildings of its size and type. But regardless of the savings and reduction of the environmental impact created by such buildings, the design was torpedoed in a future building that was slightly larger, and later in a whole new complex for company headquarters. Why?
The design for the new complex (the size of college campus) was defeated by one stupid and greedy man who happened to be the kingpin of higher management for the company. After all the design work was said and done, this man single-handedly decided that he wanted things his way and forced a re-design that placed the complex back several years in energy costs. His precise motive for so doing was not known then and he was not about to tell anyone what his actual motive was. Had the stockholders known of the waste of dollars he created, they might have removed him, but stockholders are often kept in the dark even if they are educated enough to understand the issues involved.
The design of the new and larger FOC that immediately followed the construction of the Napa FOC was taken over by those who opposed the energy-savings found in the Napa building and the reasons were well known by those of us who cared. They are symptomatic of the whole system used by large corporations today.
1. Once a building design is completed, various construction companies are contacted to bid for the job as the general contractor. Subcontractors for various trades (such and mechanical and electrical work) present their bids to the bidding construction companies for inclusion in their bids. This means that such things as air conditioning, heating, and lighting (all the energy-using things) are bid by the subcontractors.
2. The architects and their engineering consultants who design such things as air conditioning, heating, and lighting, are paid by a percentage of the actual costs as provided by the bidding subcontractors for those items. This means that it is in the best interests of the architectural and engineering consultant firms to make the their designs as expensive as possible. When a contract is a large one, this factor plays a very big role - and engineers such as I was, working for the telephone company, have to spend a lot of time checking and reducing the costs of the consultants' designs. Although passive designs such as earth berms and insulation create more dollars for the architect, energy-saving designs that eliminate air conditioning and heat pumps are taking dollars from the pockets of engineering consultants.
3. Upper management in big corporations is usually composed of those who have been the most ambitious, but not necessarily the best qualified (called the "Peter Principle"). Frequently, these people are considerably less than honest with loyalties only to the stockholders who appoint them and those who can give them something under the table. As an example of their expertise, when the telephone company began downsizing, upper management decided to get rid of the majority of the departments who spent the least amount of money each year. The telephone company engineering departments, with the role of analyzing and reducing the company budgets through checking such things as blueprints and contracts, were the first to be cut back and eventually eliminated because they spent less money per year. What happened afterward was a ballooning of company costs because no one was there to prevent scams and overdesigning against the company.
The result of the above has led to a situation where real energy-saving is impossible. However, a change in the method of paying architects and their consulting engineers could easily reverse the situation. The problem is finding and hiring people for higher management of corporations who are both knowledgable and honest. Such people could cause the design contracts to be re-phrased so the architects and consultants are paid according to the construction and on-going energy savings they create in their designs - rather than how expensive they make everything.
The foregoing, which used the old telephone company as an example, is typical of most (if not all) large corporations. The total dollars that could be saved in construction and energy costs is astounding. The effect on the environment from excess production of carbon dioxide and pollutants is equally astounding.
This is the problem. Implementing the solution can only be possible through educating the public (especially the stockholders of large companies or corporations). If the stockholders knew of the waste that is created by this problem (which affects their monetary returns), they might do something about the CEOs who allow the problem to continue.
Income Tax
Income tax in the United States was originally employed as a war measure during the Civil War and an attempt to re-establish it was made during the depression of the 1890s. This latter attempt was frustrated by the Supreme Court which declared it a breach of the constitutional provision that direct taxes must be apportioned among the states according to population.
In 1909, Congress passed a corporate income tax bill, designated as an excise on the privilege of doing corporate business. Congress also proposed a Constitutional amendment to permit the enactment of a personal tax unhampered by apportionment - which was adopted in 1913 with a measure that imposed a top rate of 6 percent on incomes in excess of $500,000. During World War I, the tax rate was rapidly increased and an excess profits tax was added.
It should be understood that $500,000 in 1913 was the equivalent of much more in today's currency, which meant that the overall tax rate was very low when compared to what it is today. The corporate tax was rather stupidly created because it was passed on the the customers of corporate products as it is today, so that in reality the only ones being taxed were the people themselves. It is difficult to say whether the Congressmen were too ignorant or just too greedy to bother to do something intelligent. At the time, the tax was considered very severe and was called "socialist finance" - which it was and still is. Subsequently, taxation was relaxed considerably and there was actually a budgetary surplus in the 1920s.
The collapse of 1929 and the ensuing depression resulted in the government increasing taxes. Even so, on the eve of World War II the levy had reached 4 or 5 million taxpayers and yielded less that 20 percent of the total national revenues. Exemptions were lessened during WWII, the populace with lower incomes were taxed, and income tax became a mass tax with a huge collection agency.
There was not and has never been any attempt by Congress to place an inflation index on the income tax - which has led to those with lower and lower real income to become targets of the IRS. Congress has used the tax as a political football and has no desire to ever give it an inflation index. As inflation continues, it serves to (1) increase the rate at which we are taxed and (2) to act as a means to create more inflation.
The treatment of corporations in regard to any form of income tax is a problem. Four alternatives are offered. First, only dividends may be taxed - but this ignores undistributed profits (those that are put back into the corporation as investments rather than being distributed). Second, corporate profits are taxed as a separate entity, ignoring dividends in the personal tax - but this fails to discriminate between large and small stockholders and ignores an important element of personal income in the measure of the individual's tax. Third, the corporation and its dividends to the individual are taxed - but this is double taxation and discriminates against profits as compared to other income. Fourth, the taxes are aimed at the corporate level of undistributed profits only - but this discourages a socially and economically desirable means of raising new capital (dollars needed for upgrading and growth).
The role of income tax today can be seen simply in the following paragraphs.
1. When a business sells goods or services to a consumer, the taxes are included in the price of the product - whether they are sales taxes, income taxes,or whatever. This is an innate law of economics that cannot be offset or removed by human law. If this innate law is not followed by the business, it goes out of business. This means that taxes are passed on to the customer.
2. In the case of income taxes, another innate law is that operating expenses are always eventually going to become deductible, while new items or services purchased will be taxed. In the case of big businesses, repairs and energy costs will not be taxed. This means that it is more lucrative for the business to spend dollars on repairs or energy than on construction. For instance, if a building is built with no energy-saving berms or insulation, its construction costs will be lower, allowing more money for the stockholders. If a building is built of wood rather than brick, the construction costs are lower and there will be more money for the stockholders. Although this leads to much higher operating expenses which continue to be a problem in the long run, this is all right because operating expenses can be written off and not ever taxed. Overall all, the waste created by having to repair the inferior wooden building and to answer to higher energy costs is never considered because these are operating expenses and not taxed. In all cases, the expenses are passed on to the customers as if they were paying additional taxes to the government - and there is much more carbon dioxide production, waste, and pollution.
Income tax was created by socialists (perhaps communists) in an attempt to redistribute dollars from the wealthy to the poor. In practice, this does not work because the taxes are reduced by managing the business as in number two above, and they are passed on those who buy from them. Almost every time an attempt is made to redistribute the wealth, it backfires and the expense is passed on to the poor. At the moment, I cannot think of any instances where this is not true. However, raising the minimum wage is necessary from time to time because inflation is always present in a healthy capitalistic economy.
In many corporations - especially those which consist of interlocking sub-corporations such as AT&T and its subsidiaries - money must be collected and re-distributed from year to year in a manner which prevents efficient allocation of the funds, creating more waste and inconvenience.
By the time one pays for the various bureaucracies which are always added along with a new tax, the main purpose of the tax has been defeated. In any case, the evils of income tax are many. First, it fails in its original intent. Second, it causes another bureaucracy to be created by those who must pay the tax and by those who must collect it. Third, it tends to cripple iniative and reduce incentives for progress. Fourth, it creates extreme waste within businesses which are passed on to the customer as hidden taxes. Fifth, it creates excessive rules and loopholes which allow legal tax evasion by those who are able to afford legal help. Sixth, it causes us to use more energy and thus create more carbon dioxide, waste, and pollution. And seventh, it taxes individual savings to such an extent as to make people more and more dependent upon the government (social security increases never begin to keep up with real inflation). People should be encouraged to save and taxing savings discourages saving.
On the program Huckabee on October 12, 2008, it was explained by Governor Huckabee and Chuck Norris that income tax is a tax on production, while a sales tax is a tax on consumption. Thus, this graduated tax on production discourages production, allows various loopholes which cause people to invest in other countries rather than the United States (which allows tax dollars and jobs to go to countries other than the United States), prevents certain people from being taxed, and prevents ministers (priests, rabbis, etc.) of religious organizations from even mentioning any political issues in their sermons (muzzles free speech). A sales tax causes everyone to pay taxes according to their rate of consumption. Huckabee explained that our politicians in Congress do not want to eliminate the income tax because they are paid by lobbyists to "adjust" income tax each year so that some people pay more and some less - the highest bidder gets the favor from the congressman. As a result, we have a large book of rules on income tax that changes from one year to the next for political reasons. This would not be tbe case with a national sales tax.
There is a proposal now to eliminate income tax in favor of a national sales tax. This would be appropriate because the bureaucracies for collecting sales taxes are already in place in most states. We could eliminate the IRS entirely. However, those who are now attempting to legislate a national sales tax are proposing one which is twice what it should be - 26% versus the original and reasonable tax proposed of 12% to 13%. Again, there is evidence that substitution of a sales tax will not be forthcoming because someone has tampered with original proposal, either hoping to kill it or to collect excessive funds for the government by enslaving our population.
Here, the cure for the problem is a national sales tax of about 12% in lieu of income tax. The dollars saved by eliminating the IRS bureaucracy would be more than adequate as a bonus. Should a larger percentage be necessary, it can be added gradually later. People should understand that a percentage is exactly that - it causes the tax to go up as prices rise, and down as they fall - so it need not ever be adjusted for inflation or deflation. For years the politicians have been using the popular ignorance of math to raise percentages. The populace must learn to understand simple math - otherwise, they are like sheep going to the slaughter.