My name is Warwick McKibben. I'm director of the ANU Research School of Economics and director of the Climate and Energy Economics program in the College of Business and Economics. I'd like to start off by acknowledging and celebrating the first Australian on his traditional land we meet and his cultures are among the oldest continuing cultures in human history. It's a great pleasure to welcome today, in addition to being the director of the Research School of Economics, I'm also the president of the Australian chapter of the Del Morris Fan Club. Adele is a fellow and policy director for Climate and Energy Economics at the Brookings Institution in Washington DC. She joined Brookings in July 2008 from the Joint Economic Committee of the US Congress, where she spent a year as a senior economist covering energy and climate issues. Before the Joint Economic Committee, Adele served nine years with the US Treasury Department as its chief natural resource economist working on climate, energy, agriculture and radio spectrum issues. Now that doesn't quite encompass but it's an interesting combination. On assignment to the US Department of State in 2000, she was the lead US negotiator on land use and forestry issues in the international climate change treaty process. Before joining Treasury, Adele served as a senior economist for environmental affairs in the President's Council of Economic Advisers during the development of the Kyoto Protocol. She began her career at the Office of Management and Budget where she conducted regulatory oversight of agriculture and natural resource agencies. She holds a PhD in Economics from Princeton University and MS in Mathematics from the University of Utah and a BA from Rice University. I'm pleased to welcome Adele and to mention that this is a collaboration across ANU. This public lecture is presented both by the Research School of Economics in partnership with the HCCUM's Policy Forum at Crawford School at ANU. Adele will speak for roughly 40 minutes and then we'll have about 20 minutes for questions and answers from the floor, which I'll officiate over. And then I understand I hope I'm about to announce that there'll be drinks outside afterwards. Okay Adele. So thank you very much for that kind introduction and I'm thrilled to be here. I want to thank the HCCUM's Policy Forum for inviting me. This is my first lecture in Australia. I'm told everybody's really nice so it makes me all the happier to be here. So I'm going to be drawing from my talk today from a paper I recently completed with two of my senior fellow colleagues at the Brookings Institution, Pietra Navola and Charles Schultz on clean energy and looking at it through the lens of industrial policy. That should be forthcoming in the next few weeks I'm hopeful to say. What I'm going to try to do in this lecture is think about clean energy policy with an economic framework. And in the sense of what is the problem we should be trying to solve when we want to promote clean energy. And I'm going to start with looking at clean energy policy in the US and give you a sense of how significant our policies are from a budgetary perspective. And then look at the questions of if markets are left to their own devices. In what way are they going to get clean energy technology wrong? In other words are they going to under provide it? Why are they going to under provide it? Why are they going to under develop it relative to what would be the economic optimum? And if the government's going to intervene to promote clean energy what's the sensible way economically to think about how to do that. So the first policy problem is figuring out what we mean by clean energy right? We intuitively know what we mean but when you write a policy you have to describe very specifically what you mean. So intuitively we think okay it's going to be low greenhouse gas emissions and I'm going to use carbon as kind of shorthand for greenhouse gas emissions. But as soon as you say low it's like low relative to what? And then you've got to either directly or indirectly specify what you mean by low. And you know there can be trade-offs across different environmental outcomes. Like one kind of clean energy might be clean with respect to say some kind of toxic air pollutant. But it might have land use impacts and you might be worried about the ecological effects. I'll give you an example of that later. We also want to think about clean kind of in a life cycle way. This is important for biofuels where you're growing crops and you want to take into account the life cycle cleanliness if you will of your energy. And this isn't exactly clean energy but you want to add at least intuitively you want to add energy efficient goods. To your overall basket of clean energy technologies. As proponents like to say the cleanest energy is the energy you never actually produce. So if something's energy efficient it means you're at least in theory backing out the need for producing energy. And that's a good thing. So even if we kind of agree on all of that certainly people disagree about some very specific technologies. Here are four examples nuclear clean coal. A lot of people would put quotations around clean coal. Natural gas certainly lower emissions relative to coal but certainly more emissions relative to renewables. And those blue bars are emissions of carbon per BTU. And so you can see natural gas is lower emissions. That's carbon also lower emissions in mercury in particular matter. And other things we care about but also it's not zero right. And new hydroelectric power clean in terms of carbon. But can have very important local ecological impacts somewhat controversial. So OK so let's just assume we've kind of gotten over the hurdle of defining of what we what we mean by clean energy. What are our policy tools to promote it. And certainly in the United States we've got a huge array of policy tools already in play to promote clean energy in one way or another. I'm going to focus in some of my data on the first two direct expenditures spending on clean energy and tax subsidies which is foregone revenue that promotes clean energy. Those are the easiest to measure but they're not necessarily the most influential things to promote clean energy. We have a direct regulation of pollution which promotes clean energy relative to its more polluting alternatives. We have risk transfers and like an example might be capping the liability associated with the nuclear power plant. OK or a loan guarantee where the government is assuming some risk or implicitly limiting the risk of a particular kind of energy. It's not a subsidy per se in some regards but it's a way of reducing the cost of that energy relative to the alternative. A new way we're seeing now is input subsidies and this picture here is of us. It's an artist conception of a solar power plant that's going to be built in the Mojave Desert using federal government land. So it's an input subsidy in the sense these guys are getting free land to do the solar power facility. It's actually going to be a pretty pretty substantial facility if it's completed as planned. And then of course the government can be a procure clean energy or electric cars. This certainly the Obama administration has promoted that. It's not as clear exactly what the subsidy is because they're going to have to procure something anyway. And you want to measure the subsidy for what might be the above market price for that good. It's a little harder to get data on that kind of stuff. So specific examples we've got basic research spending. We have tax credits for renewables. We have these requirements to use biofuels in a certain proportion of the liquid fuels that are blended for passenger vehicles. We have subsidies for low income households to do energy conservation investments. You know really all kinds of stuff labeling requirements that show that how much energy and appliance for example might use. We also like I said before we have direct regulation of a lot of air pollutants a sulfur dioxide being one of them. We have a cap and trade program for that. I'm sure those of you who follow the climate debate have heard about the potential for a cap and trade program for greenhouse gas emissions. And then we have all these loan guarantees many of which were part of our recent economic stimulus package. So how big are these things. Well they're they're they're pretty big. Now these numbers are for all energy subsidies. So the fossil fuel stuff is in here as well. In 2007 the estimate by the US Energy Information Administration of how much we spend on energy subsidies was about not quite $18 billion. In 2010 that had gone up to over $37 billion. A lot of that increase like I said had to do with the economic stimulus. Some of those numbers are coming down in 2011 and 2012 roughly divided by electricity fuels use outside electricity sector. A lot of that is biofuels like ethanol by liquid fuels and conservation and including the low income program I mentioned before. Now one might say well okay one of the reasons you want to clean energy subsidy is because we've had these subsidies for fossil fuels and we're trying to level the playing field. Well even on that basis our clean energy subsidies are relatively large. For example if you look at the electricity sector this pie chart is the different fuels we use in the United States to generate electricity. The orange slice is the renewables other than hydroelectric. So that's solar, wind, geothermal and biomass. That's about 3% of our total by kilowatt hour basis of electricity. Most of the 55% of subsidies for electricity went to those technologies. So on a BTU basis that's pretty big. Now a lot of those subsidies were for new construction of capacity that's not yet online. So it's not exactly maybe the most fair comparison but the fossil fuel incumbents are going to be quick to point out that on a BTU basis overall renewables get 49 times the subsidies that fossil fuels do. So there's a lot of debate on what the right measures are to think about how big these things are. So if we want to just kind of drill down in the tax expenditure side what is our foregone revenue from having tax credits. We also have a big program called grants and lieu of tax credits because a lot of the renewable firms don't have enough income. They don't even pay much taxes so they got grants instead but it still goes on the tax side of the ledger when we calculate all these things. So the green line here is for tax now these are tax expenditures. So those are fossil fuels the biggest you know the so why do we subsidize fossil fuels. A lot of it in the United States is the intent to substitute domestic production for imports. So what we're trying to do is get people to explore and develop US US resources as opposed to be dependent on imports. So that's you know a tax expensing of exploration and development is a big comment on that. Now here's our renewables here you see them spiking up here to almost 17 billion dollars of foregone revenue for renewables. And that's part of the stimulus package that we had as well you can see how it comes right back down again. And some of that is those grants I was talking about for new renewable electricity capacity that is coming online in the next while. So we see a similar pattern now this is research and development spending. Again see this big spike in the stimulus package. And now really this is not how to do. You think about research you think about hey we're going to you know start up experiments and develop new technologies and whatnot. And this is not exactly the most timely targeted and maybe temporary but it's sort of a goofy way to do research for any of those of you who get grants. I feel like I have one year of research spiked by that multiple. Anyway so but it is big dollars right. So it behooves us to think carefully about how we allocate these resources. So I'm going to go through three really typical arguments in the US for why you should care about clean energy. I know what I might do is map them to economic principles of you know why economically do we intervene in markets. And there's a ton of reasons and I have a short lecture so I'm going to do three of them. The first one which I'm going to argue like if you're already to go to snacks I'll give you the bottom line. The best reason to care about clean energy is that it's clean relative to conventional energy. There are environmental damages that are currently uncontrolled associated with conventional energy and we care about that. And that's worth the devoting resources to the second is energy security which is kind of this amorphous concept.  Right. So we're going to examine that a little bit. And then the third argument which seems to be interestingly argument made in nearly every country that we're going to somehow take advantage of global markets and tilt them in our direction. Now obviously you can't be doing that in every country right. But so the US is not immune to the idea that somehow we're going to be special. And if we if we if we just develop clean energy we're going to exploit some kind of potential gain there. Now if we're in kind of a rigorous policy making mode we want to distinguish all these arguments in the way in which they relate to economic principles from pure rent seeking. Because out there every firm that's got some clean energy technology and you know I've met with these guys they want me to come to their meetings and it's like oh man we're like we got algae algae oil and it's going to be great. And we're going to we're going to serve the protein to the animals. And it you know has like spinning this great story. And you know I'm not a technologist and it sounds plausible. But imagine if you're a policy maker and you've got dozens upon dozens of these folks coming to you with great ideas. How are you going to make policy around that. And so really you want to have a rational way of doing that. So OK this is my little map between these arguments and economic principles. So the first one like I said I think is the most persuasive is where there are genuine market built markets left to their own devices are going to under provide clean energy. The first is the external cost. I'm going to explain that and public goods. And this is the idea that firms are going to under invest in basic research because they're not going to be able to capture all the benefits of that research. And so the government's got a role then in providing funding for some of that research because the social benefits of doing that are going to be higher than just the private benefits. And that's something that's worth subsidizing. So with energy security in order to kind of actually give it an economic principle I got to come up with something. So I'm going to focus here on the macroeconomic risk of volatile oil prices. So that's economic concept. It's a way of thinking about the security of the economy. And the third one I'm going to frame as a distributional objective. Basically the question is can Americans benefit to the expense of other countries if we make certain strategic investments. That's the idea. Let's go go through them. The first environmental damages from conventional energy. So when I put gasoline in my car the price I pay for my gasoline reflects the costs of producing and transporting and marketing the fuel. The price I pay at least in the United States does not include the cost of the environmental damage from from that gasoline. Once it's combusted and CO2 in the air disrupting the climate there's a cost associated with that. It might be hard to monetize but it's not zero right. But my price I pay for gasoline doesn't include that. So I'm going to over consume gasoline because I'm not charged for its full social cost. So the standard economist prescription is if I got external costs I want to internalize them. So I want to put a price on carbon specifically that's going to induce me to use less gasoline in a way that's cost effective. Meaning that the cost to the environment are reflected in my choices. So all right how do you do that. Well in the United States what we've done where there's big interagency process and they they when you write a rule that lowers carbon emissions and you have to do a cost benefit analysis. What benefit do you give to carbon. It's not zero. It's not infinity. You got to put some. So they had a big interagency effort and they figured it out as best they could. And their estimate for the social cost of carbon in 2010 is somewhere between about five dollars and sixty five dollars. So that kind of narrows it down. But believe that me that's narrower than some of the ranges out there in the economic literature. Now for practical purposes they usually set a line about twenty three dollars. And the difference relies on parameters like your discount rate and how much you value future damages in the present and all that stuff. I'll spare you. But but the point is you want to put some price on and something in that range would be reasonable under the approach by the Obama administration. Now you can't have an economics letter lecture without somebody talking about marginal something. So OK. So all right. I'm not going to disappoint you. This is a graph of the marginal abatement cost of carbon and the horizontal axis. If I can get my laser work maybe I'll just kind of do it right here. So the horizontal axis I'm reducing emissions relative to business as usual. So the environment is getting better as I go to the right. And the vertical axis is the dollars per ton of carbon. OK. So right down here at the origin this is incremental cost for that next ton I reduce. So down here when I first start reducing relative to business as usual it's pretty cheap. My first few times this could be energy efficiency. Some people even think that there's a negative cost associated with that. I'm going to I'm going to say in business as usual people are smart and they're doing profitable stuff. So above business as usual it's going to cost me something that's not going to be too bad. So then up here now here I'm probably switching from cold to natural gas in my electricity system. So I've done my energy efficiency. I've done my fuel switching. Maybe up here I'm doing some renewables. You know I'm kind of getting up a little higher and cost per ton of carbon abated. And then way up there I'm shutting down my economy. We don't want to do that. Right. So my marginal cost is the red thing. So the area under it is my total cost. I'll show you what I mean by that. So believe me this is going to relate to technology. I promise you. So so if I put a twenty dollar a ton tax on carbon then I'm going to reduce my emissions as an economy until it's cheaper to pay the tax. Right. So I'm going to go out here. I'm going to reduce this much emissions. And then after that I'm just going to pay the tax because I'm not going to pay more than I need to. So the area of this triangle here is my total cost of abatement. The area of this rectangle is actually supposed to be green is my tax revenue. OK. So my actually this is kind of the scale of the proposals we've been looking at tax revenue is a lot bigger than total cost of abatement in the proposals under consideration. Now if I want to reduce more I can raise my price. Right. See my blue triangle's gotten bigger. I'm my blue arrow a pound of time reducing has gotten longer. OK. So I can always raise my price. But what happens if I develop new technology then I've changed my red curve. This is what we want to do with technology development. We want to change our red curve. I've shifted it down. And now for that same price on carbon I get way more emissions reductions. So strategically what you want to do with your energy your clean energy policy is shift the cost of abatement so that you get more bang for your buck. So makes sense so far. OK. So what what the policy what you want to do is move technologies that were up here in terms of abatement cost down here. So that's what you're going to do with your R&D. Now notice that firms with that price on carbon already have the incentive to do the R&D for all the abatement that's going to be cheaper than my $40. We don't have to pay them to do that. They're induced to do it because they get to avoid the tax and they're better off doing that investment than paying the tax. So this idea that we got to pay everybody for the emissions reductions once we have a price on carbon just doesn't hold up. What we want to do is strategically invest in technology to make make every dollar count. So the price signal doesn't have any lifting. We need the government to do the R&D that's under provided.  We don't have to pick the technology. Now I do want to make one point. There's no logical relationship between the size of this rectangle and what we should be spending on R&D. OK. A lot of people say oh well we get to take the tax revenue and fund clean energy. Well I just explained the private sector is going to be investing in clean energy anyway. So you could just be compensating them for stuff they were going to do anyway. Or you might be over or under investing. We don't know but don't rely on this kind of goofy tight ear marking of tax revenue because there's no logical relationship. So what if we don't have a price signal. We can try to adopt policies that would mimic a price signal. What would firms be doing if we didn't have a price signal. We're going to try to be convincing them that there will be a price signal. Because remember firms invest not just on today's relative prices but to what we think prices are going to be. So if we can convince people prices are really going to be different in the future. It's almost as good as having a price already there. But what you don't want to do is take those. This is my opinion is take those technologies way up in the red curve and start finding that because you're going to get way less environmental benefits per dollar spent. Then if you focused on the stuff just on the margin of people weren't going to do already. But it's still pretty cheap to do. And it's a policy challenge finding that sweet spot. But that's the idea. So why don't we just have a tax credit and give people to buy more energy efficient equipment for example. So my colleagues my esteemed colleagues work McKibbin and Pete Wilcoxson and I wrote a paper looking at this very idea. So we compared a tax subsidy for energy efficient household equipment and a carbon tax. And we we jiggered it so they were roughly had about the same fiscal footprint.  But we just gave it all back to households or taxed everybody to finance it. So it's all fiscally neutral. And said OK which is going to reduce emissions more. So you can see. Well maybe you can't put that that dash red line up there relative to that very faded gray thing. That's the emissions reductions of carbon relative to business as usual that we estimated with their model for that tax credit I was telling you about. It's about 130 billion dollars a year of lost revenue. And you got very little. OK. Now compare that to the tax on carbon. And that's the green line. OK. So dramatic difference in the emissions performance of a carbon tax relative to this tax credit for energy efficient equipment. Now why is that. Well. Glad you should ask. Now. So if you think about it the carbon tax does everything the tax credit does and more. It changes the preference of households for what it what stuff they buy right. You want more energy efficient stuff. But you're also going to use it less. So in addition to getting my high efficiency boiler and how could you not want that. I'm going to keep the thermostat lower in my household in the winter. Right. Because my energy bills are higher because now electricity prices fully reflect the cost of carbon. Likewise the carbon tax is going to induce the electricity guys to use different fuels. So you might be switching from cold and natural gas. We saw how it have roughly the carbon emissions. OK. But a tax credit for for this boiler is not going to do anything in the electricity generation industry. Right. And finally. And this this this is a result that's going to vary across models in particular. But so essentially what you're doing with the energy efficiency program is taxing people to buy down their energy bills. OK. That's how you fund the tax credit is through general taxation. OK. So people have this savings from their energy bill that they spend on some. What do they buy. Well energy in part. So you get this offsetting effect of that energy savings. Whereas with the carbon tax. They're spending more on energy. Energy is now relatively more expensive. So all I'll sequel they're going to buy less of it. So all of these things together drive that my my green line down a lot more than my orange line. OK. So that's the end of the environmental damages. Thankfully. Now we're going to talk about energy security. This is very much a US focused discussion. OK. So you've seen. Well maybe you haven't. But it's it's incredibly tempting. The politicians want to make their political ads. They have this beautiful landscape behind them with windmills in the sunset. And then there's some kind of Malif Lewis voiceover about energy security or energy independence or something like that. Well in the United States this is just goofy. Because all of our electricity fuels are North Americans. I don't think we're worried about the Canadians. We're we're net exporters of coal. We've got natural gas supplies that were undreamed of 20 years ago. Right. So it just doesn't make sense to think about energy security in terms of unstable supplies in the context of electricity in the United States. So what about oil. Well just over one percent of our electricity is generated from oil. And that's going down. So really energy security is a story about oil for the United States. We do import oil and oil prices are volatile and there might be a problem associated with that that we want to do something about with our policy. But here's the rub. It's not a straightforward. Not none of this is straightforward but really really. So we care about oil prices when they're high. Right. That's when people are losing income or or our current capital stock is not optimized for the price of oil when it spikes. OK. People have gas fuzzler cars when they really should have or fuel efficient cars. But when we're going to substitute oil for something else it's expensive. What are you going to do. You're going to buy a fuels. You can do public transportation. You're going to do electric cars. There's a Tesla there. That's about sixty thousand to one hundred and nine thousand dollars per vehicle. We just we just gave them a big loan guarantee of four hundred and sixty five million dollars and a tax credit of seventy five hundred dollars per vehicle. I mean we're doing doing what we can for electric car guys but I'm sorry they're just not penetrating the market. And some of the substitutes for oil like we had this whole thing of coal to liquids in the 70s when there was a big oil price spike. It's nasty in terms of the environment. It's all kinds of carbon emissions. So try as we might. You know you have to think hard about whether you really want to back out of oil. It's one of the highest costs of abating carbon emissions. And you have to have a strong story about what problem you're trying to solve. The story about our import dependence is not always kind of the way you hear the rhetoric. Our import dependence has been going down for a few years and actually the Obama administration's just come out with with statements touting this fact. A lot of it has to do with reduced oil consumption in general. Seeing how prices are high and the economies tanked but you know there you have it. Also where we get our oil it's not all kind of sketchy Middle East dictatorships are two of our top five biggest sources of oil in Canada and Mexico. And you know half of it nearly is from the western hemisphere. This is not to say that we don't care about instability of supply because obviously it's a global market. It's a fungible commodity. But the story is not quite as stark as some people make it. But so if I was going to go back to my economic principle what am I worried about. I am worried about the fact that when oil prices spike people have less money in their pocket to do other things with and that has a macroeconomic effect. And I'm also worried that you know that can trigger inflation right. And so you have to be ready to respond to that. So the thing is though what's the best response to a threat of inflation. Is it electric cars or is it responsible monetary policy. Certainly my co-authors on my paper would say it's responsible monetary policy. And if you want the answer to be electric cars I think you got to you got to tell a stronger story there. So let's go to our third rationale for clean energy. Okay so this is again sort of partly yeah it could be an economic argument but it could also be partly rent seeking by people who just want to tell a story about the benefits of clean energy. Nobody wants to talk about clean energy being more costly than conventional energy. You want to tell a story that clean energy is good for the economy. It's going to create jobs. It's going to it's going to provide the renaissance of the American manufacturing sector. Whatever story you want to tell and people you know there are people who sincerely believe that that's that's a golden opportunity. This is in the tradition though of a lot of arguments about industrial policy generally it was you know okay today it's clean energy it was automotives it was electronics. The Japanese were going to eat our lunch on on cars now the Chinese are going to eat our lunch on on solar panels you know but it it sort of rings familiar from that perspective. And there are a lot of counter arguments for for this this belief system. And one is that look if if the United States if we're thinking okay clean energy is going to be a manufacturing boom to Americans. Well why is clean energy different than other technologies. What is it about clean energy that's different than electronics and all the other things where manufacturing has moved to other economies. You don't hear a really a strong story about why clean energy is different. Maybe in some cases in specific technologies it is but it's really going to be hard to subsidize your way into a comparative advantage over the long run. It may not just be fiscally sustainable. And this idea of creating jobs okay in a in a in a normal economy or not in a massive recession where those jobs can come from. Well they're going to come from other jobs. You're going to shift around what sectors employ people but you're not going to change the total employment. And clean energy obviously is a risky technology. And who's going to buy it. It's going to be a function of who's mandating people to buy it right. As long as it's more expensive than conventional energy we're going to have that issue. And if you want to invest in a strategic industry why clean energy. Maybe it should be biotech or you know exportable business services or something else. You got to tell a story why clean energy in particular. Finally you know there's something to be said for you know if the Chinese want to make solar power cheap knock yourself out. It's cheaper for us. It's better for the environment. It's good for the U.S. economy. If we're going to have states with renewable mandates that's going to be less costly for them. And and and you get to do business with this nice lady right here from from Chinese solar dot com. Okay so all right well what about the job situation when we're in a recession. We've got an employment. This is you know a serious question. So how does clean energy stack up to other forms of fiscal stimulus. And there you have to look at the sort of the standard criteria of timely targeted and temporary. I showed you the goofy R&D chart. What about these energy efficient retrofits. Okay. High labor compliment to this. Not a lot of skilled labor. That that might work. Okay. You're helping low income people. There's a distributional benefit. They're getting lower energy bills. They got a high marginal propensity concern. There could be some multiplier there. You know renewable deployment. I'm not so sure because there you're trying to introduce more electricity capacity in an economy where there's not a lot of new demand for electricity. I mean the whole point is your economy is contracting. And so unless you've got conventional energy being retired which we do actually some now because we've got new mercury and air toxic rules. We're seeing some coal plants come out of a business. But in general you got to be careful about trying to spur deployment and sales of something in the middle of a recession. And the other problem with these guaranteed loans as a stimulus really what's going to be the long run benefit. You're really going to have to make company viable that wouldn't otherwise be. Because you're not going to subsidize your way into a firm's long run competitive advantage. You just can't do it. So it might be the case that we're able to do that. But also you know we've already seen some bankruptcies associated with these loan programs. So that so I've gone through this read the three arguments and kind of expressed my interpretation of how they line up with with economic principles. And now there's there's practice what really happens. OK. So it's a political process. You're spending money. It's irresistible. You know I worked on Capitol Hill. I saw this and people can't help themselves when there's a big slush fund for wanting to direct money to favor constituents or regional areas. Oh our areas hard hit. We need these we need these subsidies. You being hard hit and you being a cost effective place to put clean energy funds is in two entirely separate stories. And we've seen this massive waste on what I would call political wins. It was sin fuels or it was breeder reactors. The hydrogen economy is the most recent one. We just spent one over two over a billion dollars on the hydrogen economy. Did you hear anything about the hydrogen economy anymore. Maybe you guys have it in Australia. But we don't we don't have a hydrogen economy and we're not going to hit in my lifetime. And so you want to have a system where the spending is sort of insulated by this this political dynamic. And nobody no politician wants to give this spending authority over to some kind of objective apolitical body. So it's a real conundrum of how you actually get a policy to to to devolve into into a more efficient direction. So I'm going to conclude here. You heard it already. Strongest rationale for promoting clean energy is that it's clean. And the most efficient way to do it is to tax the bad stuff and to make those price signals clear. A lot will take care of itself if you do that. And you don't have to pick technologies. You just put that price on people. The market has a way of figuring this out. But you do still have to have a carefully crafted R&B program as much as possible objectively delivered because there is a market failure there. And you do have that potential to move that red curve. I thought that was a really terrific, coherent presentation. But what you didn't refer to was what climate science is telling us about the rate at which we need to reduce emissions to avoid dangerous climate change. And it seems to me that I think in the USA as an Australia we probably have to transform our energy sector more quickly than that type of policy framework would permit, for example, we have to go through electricity generation from coal to natural gas. But we need to move on from gas for a year because I think that changes the sort of economic framework that we have to do your analysis. And I think it's probably somewhat challenging on one of your thoughts about that one. So I would say this. I'm not a scientist. I'm going to remain agnostic on the true social cost of carbon. But whatever it is, you need to optimally turn over capital stock in the most emissions efficient way to minimize the cost. You don't get any browning points from the climate if you spend more than you need to. So because there is this potentially profound economic cost associated with meeting your environmental goals, whatever they are, you want to be responsible about that. So I think that you may not like $40 a ton, you may not like $65 a ton, you might like $100 a ton and going up from there. But whatever it is, putting that price on carbon and ensuring that all economic activity through everything from electricity to cement and everything else incorporates that cost to the environment. That's going to be your way, the ideal way to transform your economy. If you start mandating, you know, okay now we're going to have, and people propose as 80% renewable electricity generation by 2020, okay? Well, you know, how does that help you optimize your costs associated with your overall economic transformation? It's dictating your technology, but at an arbitrary cost. So I think, I agree with you that some people are arguing for much more aggressive emissions reduction. I'm not sure it changes the big picture of what the policy next would need to be. This question in the hearing department. I don't know if you're aware of the negative renewable energy target here. I've heard a little bit about it and certainly we've had discussions back home about similar policies, yeah. Yeah, there was a lot of work done at the time of renewing the mandated renewable energy target, which is essentially creating a new market for renewable energy. And whether you needed that if you have carbon price, there has been a lot of discussion about that probably a couple of years ago. And I think the problem with having an R&D program and then having a carbon price is there's a very big gap in the middle about turning your R&D into affordable technologies in a reasonable time frame. And I really think you're missing that gap. So that's why I think we have gone in this country having a mandated renewable energy target. So there's a market. There's the R&D. We still have a gap in terms of commercialization of those technologies in that whole process. So I guess what I would say is if your focus is crystal clear on the environment and not so much how much of our goals are met with solar or wind. Why do I care about solar? I care about the environment, okay? And whether my environmental goals are met with energy efficiency or reductions in deforestation or whatever, I want to do it the cheapest way possible. And as soon as you say, okay, well, X percent has to be renewable. Well, maybe you could get a much bigger reduction for a lower price if you went to natural gas instead of coal, okay? It's not renewable, but it could be for dollar spent. You could get way more emissions reductions. So I'm not convinced that mandating certain technological approaches necessarily makes sense. And I would also probably argue that the whole point of the price on carbon is to give you a market for that new technology. So if you just have R&D and you don't have a price on carbon, you produce supply, but you haven't produced demand. And without the two of them, you haven't done much. So you've got to have both. And if you have the price on carbon, people are going to adopt your technology. And if your technology is not competitive, too bad for you, somebody else is going to be and the economy is better off for it. Not you and your firm, but the economy overall, because you've got to compete with everybody else to provide that abatement for the least possible cost. There's a lot to be said for that just to create a construct. Is the least possible cost can be brought forward for the great deal if you invest in that new ground between research and commercialization. And given the rate of climate change and the need to address it more quickly, we shouldn't be having the price on carbon 20 years ago. We didn't. We've got a lot of ground to make up. So just putting in a theoretical, let's have price on carbon in an R&D program is just not going to get us where we need to be in the timeframe that we need to be there without some other additional measures. You know, a lot of people believe that. But I think this is where economists are different. So generally economists believe in downward sloping demand. You raise prices, people want less of it. And whatever it is you raise the price of, they're going to want less of it. So you raise the price of carbon, they're going to use less of it. It's kind of a fundamental belief system amongst economists. And I think the environmental community is not always there yet. I mean, we heard this in the cap and trade discussion in the United States. You know, it was very interesting. So the environmental community felt very strongly you need a cap, not a price. So a cap was acceptable, but a tax wasn't. Right? Though never mind for the fact that there's going to be a price for every cap and there's a cap for every price. But they felt very firmly they wanted a cap. And for the built-in suspenders, they want appliance standards and fuel economy standards and all this stuff that said dictated where the emissions were going to come from, even under the cap. All you're going to do is raise costs. If you tell where the emissions reductions have to come from, you're not only capping it, you're making it more expensive and constraints. So I think this is the communications challenge for my profession in this topic is to convince people to demand slopes downward. Right? And we haven't done a very good job. Sorry. Sorry. I'm sorry. We can continue this. I've got one here. I've got one there. I've got one here. Can you please state your name? Hi. I'm Sandita. I'm doing a master's in managing trade and comfort school. Thank you very much for your such a comprehensive presentation. It was really interesting. Maybe because I'm in the front row. But my question is like, if we have trade versus red analysis on renewable energy, the renewable energy being added with a minute source of energy is a long debate. So I'm interested to know if there is any policy in U.S. to deal with this particular problem. How's it going? So right now renewables like solar and wind, the truly intermittent sources, are such a small part of our overall generation capacity. We haven't really grappled with that. Although over time as we see more and more deployment of renewables, it's a bigger share of our base load capacity. We're going to have to deal with the sentiment and see more. And a lot of what you're seeing is when they deploy wind, they also deploy natural gas backup. So when you're estimating the net carbon benefits of a renewable, you have to incorporate some estimate of what fossil fuel backups there might be to deal with intermentancy. And somebody who knows more about the technology will give you a better answer. Okay, gentlemen. Mark Lonell from the MBA program in Budget Business and Economics. I was actually living in the States 20 years ago during the first Clinton administration after the Rio conference where one of the legislative initiatives was a carbon tax, which didn't get very far. And as I recall, the killer argument was in the Congress was that cheap energy gave the United States a key competitive advantage both domestically and in the world economy and the world to give that up. I guess I'm wondering how much the debate is going in 20 years in relation to your second dot point about pricing. Yeah, so it was a BTU tax and it crashed and burned and a lot of people who have promoted that were scarred deeply. And it explains the reticence in part for, well, carbon tax has two problems, carbon and tax. But be that as it may, hope brings eternal. But I do think that that experience with just how politically badly that went led in part to this emphasis on a cap and trade program because it's not a tax. Although for practical purposes it has the same economic effect as a tax in terms of output prices to consumers. But the hope was to sell it differently. And it got through the House of Representatives and then it died. And now everybody's scarred by that experience. And so the hope now is, so there's this like rumblings of discussions in Washington and, well, can we bring back the idea of a tax, make it a carbon tax, but then wrap it up in corporate tax reform and meeting our fiscal deficit and kind of overall emphasis on reforming the tax system. So that's kind of where the discussion is now. But yeah, it is cap and trades truly dead and people kind of have that sort of bad dream of the BTU tax behind them as they contemplate a carbon tax. The other option of course is of a Kevin Wilcox and hybrid.  I have a question here and then David Stern will back. Tom Worthington from the Engineering and Computer Science School here. I guess my question is how much of a role does economics play in the overall society's decision making on this? I teach students how to measure and reduce carbon emissions using computers. But I say to them, when you're presenting it to the boss, you've got to find something to get their attention and make them do what you want. And it's probably not due to the costs involved because they're very low. And you've got to find what motivation it is. For example, you'll all get iPads. So, I mean, how much do the economic factors influence the approach and how much of the other political factors? And do we need a new form of economics to deal with that? So, I would say that firm level choices are different than government policy level choices in the answer to your question. And certainly at the firm level, if you're not concerned about the economics of your firm, you probably won't last very long. So, hopefully the finances of your firm weigh heavily on your investment decisions. Not to say that's everything. Because certainly we see firms lowering emissions and, you know, it has a PR value where it's got a sort of a lower regulatory risk exposure. And there are reasons to reduce emissions. But now I think in the business as usual trajectory, it's around saving energy and having more efficient production methods. Now, in the government policy, I have to say, okay, so I've worked in the policy world for 15 years now. And pretty much every economist I know has tire tracks up their back on, you know, one thing after another, whether it's agricultural subsidies or carbon pricing or free trade or any number of the things that we try to opine on and get overruled on. That said, I do think one of our biggest roles is to shoot down incredibly bad ideas. And if you measure our value added in terms of killing really bad ideas, I think it's pretty good. So, yeah. So it kind of depends on your metric. We are running out of time. I've got David Stern, I've got Frank Yotso, and then I may or may not have time depending on the things that he answers. Yeah, David Stern from the school. I guess I wanted to use the case version of the argument that a carbon tax internet can get the kind of issues and reductions we want is that you agree that we need to have some investments in R&D. So the question is, what was ultimately being a balance between carbon taxation and the opposite of somehow subsidizing or funding R&D? And then if that carbon tax isn't politically feasible, is there an argument for it over going beyond the first best points in terms of investing in R&D? Yeah, so there's R&D and D&D, there's research development, demonstration and deployment. Okay, I get my D's mixed up. And so, okay, one way to interpret your question is how far out the D's do you go? Well, I tend to think it's hard to scale up R&D really quickly because if you think about it, it's a very specialized labor pool. You know, all you're going to do is bid up the inputs for R&D. If you try to do it really quickly, it's not that you can't do it, but you're going to, to do it efficiently, it's going to have to be ramped up in a sensible way so you don't just, don't just bid up inputs. And then the optimal mix, I think, is sort of where you think markets are not going to operate. So if you have a price on carbon and you think, okay, that price is not sufficient to induce the kind of technological change you think you need, you're going to have to supplement it. But I think what you don't want to do is use government tax dollars to pay people to do stuff you're already requiring them to do because that's a transfer and that's going to end up being efficient because it costs you money to raise that revenue.  So you've got to use your tax dollars as efficiently as possible and minimize the transfers involved in there. So I don't know if that helps, but there's a way to think about it. Frank? Yeah, Frank, you're also, it's good. Back to that question of when possibly the U.S. might be putting a price on carbon in the future. China is about to see the virtues of this starting on six or seven demonstration schemes in fairly large areas of the country. Talk about a national system in China possibly well before 2020 for carbon tax or trading. Do you think that once China demonstrates that this is a good idea, the U.S. might have another go at it? Or are we more in a space where we are realistically looking at regulatory approaches prevailing for a very long time to come? So, good question. So it is easier to establish these policies when you don't have a representative democracy and I think more power to the Chinese if they can pull it off. In my opinion, the U.S. should be making a big deal in support of the Chinese efforts because I think we should, my own view is that we should be out there helping them. We may not be able to do it ourselves, but we have a really good tax administration system and I think that there's a story to be told to helping them with the logistical issues involved in that. I do think that for the U.S. to undertake very vigorous climate policy, it is a necessary condition for our major competitors to be doing something substantial as well. I don't know that it's a sufficient condition, but it's certainly necessary. We certainly saw that in the climate talks. I do not think it is possible to meet our climate goals without a price on carbon. I do not think it's possible to subsidize our way out of this problem. There's not enough willingness to tax, at least in the U.S., to do that. So we got to have a price on carbon sooner rather than later. I can only hope that as the science becomes more compelling and inarguable, that it will move the political process. So far the opposition has been winning on that, but I kind of view it as a short-run victory. Or maybe medium run, we'll see.


Hello everybody, I'm Lance Coyke and today I want to talk about getting everything you can out of your row So if you watch the previous 15 or so videos, we've talked about rowing different variations of rowing and fixing common flaws and rowing those things came to my mind first because We generally address them first. I think it's important to get your setup right before you try to do movements Okay, but I don't want to sell this this rowing arm short. It messes up too So once you've watched those other videos and you've mastered this Setup where you've kind of got your weight secured over on the setup side and you feel that ab Then you have to look at what the arm is doing and oftentimes when you're Thinking so much about the setup. It's really easy to mess up the row Biggest place that people are gonna mess it up is they just don't do it all So it'll do it'll look something just like this You see my shoulder kind of pokes forward my elbow comes back But my shoulder complex doesn't shift itself back and what that does is it places more stress on the shoulder joint and less stress on the muscles responsible for rowing So once you get this setup if you notice yourself doing this row You want to I like to break people break the movement up for people So the big steps are shoulder comes back and then elbow follows and I'll do it just like that I'll do the opposite to come down and I'll do it stepwise like this And it looks kind of weird feels kind of weird But it helps you kind of figure out the two different motions involved in rowing and Then once you kind of get the hang of it you can try to smooth it out Oftentimes people are worried about Rotating too much and I'll just you know, I'm gonna say you can rotate a little bit I don't want you doing this Because that's not what we're doing here. We're not doing just a pure rotation exercise We still want to load that upper back and those arm muscles But a little bit is actually necessary to get the shoulder blade Positioned to where it needs to be so that the shoulder joint doesn't get overloaded like this That one is really really really common. I would definitely avoid it if you have any Well, if you're anyone I would avoid it because it's suboptimal mechanics for muscle building and for longevity of training, but if you have slap lesions or Glenoid labrum problems, I would definitely fix this as quickly as you can With that, you know with this stuck shoulder position and then more elbow Retraction rather than shoulder Retraction you just you get more movement and more grinding and more pressure in the shoulder joint itself Those are mechanics that you can simply fix with just a little bit of queuing If you have really tight pecs, you're gonna find this motion kind of difficult That's why I really emphasize the setup first because you need to secure yourself with your abs So that your pecs can shut off and elongate but since you're pulling them long From both directions while rowing and while turning your abs on sometimes you just run out of motion, right? They don't like to shut off all the time In which case it is okay to not row so far. You don't have to row up this high every time Or every person doesn't have to row up that high Especially if you're compromising your positions to get it, right? So if you start to do some of this to get that extra little motion Even if you're getting the shoulder blade back and then you're tilting forward at the end to get the last little bit of motion That is still suboptimal. That is still something that I don't want I prefer you to train with less range of motion, but keep the tension on your muscles While you do it. So Don't be afraid to take the weight down Check here you go at the door. Don't be afraid to limit your range of motion more is sometimes better, but not always and Make sure you kind of just don't be afraid to be awkward when you're learning it, right? You can break it up into those movements Shoulder comes back first then elbow follows and then from there you can learn to smooth it out. Okay, but Mastering not only the setup but also the rowing mechanics is very important Okay, this is one of our Fundamental movement patterns. So I like to start with the three-point supported dumbbell row because it places a lot of emphasis with that Downarm that setup and it helps you get the core positioning that you need and then doing one arm at a time Makes the rowing a little bit easier to learn where you're actually taking your shoulder blade back and you can get a little bit of that Rotation rather than not having that rotation available to you when you row with both arms So consider that I would suggest starting with the three-point supported dumbbell row I would suggest watching some other videos to make sure you're setting up correctly and then I would suggest You know check your ego at the door Choose an appropriate weight. Don't do too many reps Don't try to squeeze too far and just make sure that you're feeling it where you're supposed to be feeling it


Hello in this presentation we will enter a bank reconciliation into our bookkeeping problem in Excel. Keep in mind how that same information could be input into accounting software such as QuickBooks. We will first take a quick look at QuickBooks and then jump back over to Excel and enter the data there. When considering QuickBooks we have a feature to allow us to conduct the bank reconciliation that starts with choosing the account we are going to choose the checking account and then we're going to put in the date we're first going to reconcile the first month. So remember we have two months worth of data now we're going to go back and reconcile the first month and take a look at some of the problems that can happen in making adjustments in that case if there's a problem and we need to make some adjustments for the prior month and then we're going to have the beginning balance and the ending balance and enter that information. Once we do that we could say continue within the QuickBooks software and it really just gives us a detail of our bank banking information which of course is similar to our general ledger listing out the date of the transaction the checks for the transaction and the amounts. We can then compare those to our actual bank statement and all we're going to do is just check and check off these information we're going to check off everything that's on the bank statement to what is on the books here and everything that is similar we're going to say has cleared by checking that information off everything that has not cleared then will be unchecked and that's how QuickBooks will generate the bank reconciliation so we'll talk more about what that is when we put this into Excel but just note that we'll do the same for the deposit side we're just going to say here's the QuickBooks data and we're just checking everything off and we're going to match that over here this is going to be our bank statement and we'll just tick and tie this out this will make more sense as we do this in Excel that's just a quick example of what the QuickBooks looks like as you're doing this bank reconciliation and once you have done that we're going to identify anything that's going to be on the bank statement that is not on the books in this case we have these two items that were on the bank statement not on the books when working with QuickBooks then we would just make the adjustment meaning we would go into the account and actually in the check register make an adjustment enter the data for anything that's on the bank statement that's not on our books and we would enter that data and then go in and check that item off we'll do the same for any other item the bank service charges will actually go to the check register and enter that data and then go in and check that off this will again make more sense as we work this in Excel and then once we're done it'll indicate that we have been reconciled in that we'll have a zero in the differences column down here in the bottom and in essence we will just generate it'll generate a bank reconciliation based on that information so in order to get a better understanding of what is actually happening what is a bank reconciliation and how did that generate a bank reconciliation and why do we need to do that we'll put this information into Excel here we are back in Excel we are going to do the bank reconciliation for January so remember we're at the end of February and we didn't reconcile the account as of the end of January and now we're going to do the two bank reconcilations back to back in February and talk about the pros and cons of doing something like that what we're doing is we're going to be reconciling the bank account and that means we're looking at the bank statement and just tying out what the bank statement has to what we have and if you would think that if we were going to look at the same date as of in this case the end of January you would think that the balance at the end of January would match on the bank statement as to our books if everything was done correctly but that's not going to be the case because of timing differences meaning checks that we wrote that haven't cleared the bank and also deposits that haven't cleared the bank therefore we want to reconcile those items and we want to do that for a big reason one to check our cash account obviously because the cash account is very important but also by checking the cash account because the cash account is involved in the accounts receivable cycle with in the payable cycle within just about every cycle in the accounting process we're really given a good check about on every cycle within the process so and the fact that it's being checked against a bank which has very good bookkeeping services and is often very accurate means that it gives us a lot more verification to all accounts so it's really our second best line of defense in terms of catching any errors within the double entry accounting system other than simply the debits and credits the double entry accounting the balancing system itself so we're going to go ahead and match this what we're going to do this now we're going to go to the bank reconciliation is going to be all the way to the right we'll see a bank reconciliation so we'll take a scroll all the way to the right looking for the bank reconciliation area and we will see a bank statement that we're going to then compare to our books so it's all the way over here in the columns dw through ek so dw through ek that's what we will be working with here and what we have is a bank statement on this side and then we're going to have this is the gl account so first bank statement what is it we've all probably seen a bank statement we're going to get it at the end of the month it's going to come directly from the bank this isn't something that is from our books it's from the bank so this is what the bank says that we have and it will generally have a beginning balance it's going to have the additions in summary and then any subtractions in summary and then the ending balance this for the month of january the first month of operations and then it usually gives the detail meaning we've got deposits by date here's the date of the deposits and then we have the checks here by date and we also typically have check number and then the amounts there as well any other withdrawals or any other activity in this case we have withdrawals and bank service charges to get to our total in terms of the deductions and our total additions which are these items here so what we want to do is look at all this information and be able to tie it out to what we have if we can double check everything if we know that all these items for example are on our books then we can be pretty confident that those are correct because they're also on the bank and that gives us assurance that they are okay in order to do that we're going to take a look at the general ledger the activity for the banking for january so note that we are looking for the month of january rather than where we are in currently now the month of february and therefore where do we get this information went back to the first tab so this tab over here went all the way back to this tab the trial balance first tab and we picked up the this is the 94 437 at the end of january and we're picking up the gl all this activity the gl that made up that 94 amount right there so that 94 is being generated from here and all the detail is this so this is the activity we have going back to our trial balance for february here we have that so all we did was copy and paste this over here and we're just looking at the detail now and so all we need to do then is check off everything that happened here to here and see if it all ties out how do we want to do that it's makes a big deal that we want it's important to know whether we're going from the bank statement to the books or the books to the bank statement i would start off going from the bank statement to the books and then go the other way because when thinking about this if it's on the bank statement and it's not on our books it's most likely that there's an error in our books and we're going to have to fix whatever the problem is if on the other hand it's on our books and it's not on the bank statement then it's most likely the fact that there's an outstanding item meaning an outstanding deposit or an outstanding check so what we'll do is we'll just go through here and check everything off and see what happens first going from the bank statement to the books as we do it just going to highlight everything as we go so here we have the deposit here of 50 000 i see that 50 000 here in the books so i'm going to i'm going to highlight that i'm going to right click that i'm going to make it let's make it green we've made we found that there's the 50 000 there i'm going to highlight this there's the 50 000 there note it might not always be in order we see the 65 before that 50 here that's because it might have taken different times to deposit in the bank meaning we may have deposited one electronically while we've deposited the other one by going to the bank and putting it into the ATM machine or something like that and if that's the case it might take the bank a different amount of time to process the checks so the dates that the bank have will always be later than the bank than the book dates because we recorded it at the time that we made the deposit the bank is going to have to take a little bit of time in order to process the deposit then we have the 65 000 here we see the 65 000 there so we're just going to check that off or highlight it and say yep we found that there we found that here looks good and then we have the 628 here this is a deposit so i'm just going to highlight that i see that here i see that here the 628 looks good then we see the 20 000 here and the 20 000 there looks good note we also see a thing that's a little bit tricky is we have a zero in the beginning balance here and really the beginning balance is that 25 000 because this was our first month of operations so that's can be tricky in the first bank reconciliation to get that beginning balance right we're going to have to enter it in the data in some way but here's the beginning balance on the books and we're basically just going to tie that out as well so here's our beginning balance there we have it there and we have it here so when we go to to record our our reconciliation we will we'll be using the 25 000 as the beginning balance looking through the checks we have this check and and uh if we had more detail on the books we would also have the check number and the date on our books here we don't have as much detail because we are limited on space and don't want to make the thing look too uh intimidating so remove some of the detail but just remember that these dates on the bank statement aren't something that we can tie out exactly to our books our books will always be the date prior to when they cleared the bank but the check number will always be the same or should be and so should the amounts those are the two things we can use to to tie these items out so here's the 12 000 there we got that here it is on our books here's the 16 check 1002 here it is there here it is on our books and just right clicking and highlighting these as we go and i know this is tedious this is actually you know the way this stuff is done here and then here's the 7 000 we're going to say there's the 7 000 here it is on our books we're just checking these off just highlighting these there's the 400 uh check here's the 400 on our books check that off here's the 5 98 on the bank statement here's the 5 98 on the books and then we have the 6 20 now once again it would skipped a little bit so we're going to say okay but i still see that 6 20 here there's the 6 20 there and here's the 15 000 here and here's the 15 000 there so i had to skip around a little bit no uh to get these and we didn't see them all line up perfectly there's some numbers in between haven't found and then we're looking for this 80 000 withdraw and we don't see that here so so this and this 15 i don't see that on the books so these two items are on the bank statement not on the books i'm going to make those yellow say we're going to have those are the differing items these are something we're going to have to deal with we're going to have to reconcile and then on our books if we look on our books and go the other way just to double check everything i say hmm i didn't check off this green item do i see that over here we're going to say no it's not over there it's not in the deposits so i'm going to highlight that and say that's a reconciling item i'm going to have to do something with that same with this 11 000 i don't see it in any of the checks so i'm going to have to do something with that uh this 500 i don't see it over here at all so we'll have to do something with that as well this 320 360 we don't see over here so we'll have to do something with that and then same with these two here they're not they're not over here on the bank statement so that's what we have here now when we look at these we might say hmm these must all be errors that happen here but note that they're not going to typically be errors on one on this side because we're saying that this deposit happened probably at the end of the month and therefore it may not have cleared the bank yet and the same with these checks these checks could be outstanding for a pretty good amount of time because the check has to go to the mail and then the other person has to get it and then they have to deposit it and then the bank has to talk to them to the other bank in order to know the deposit was cleared before we get it so even if we wrote the check sometime in january it's very uh clear it's very likely that it doesn't clear the bank till sometime in february so that those are going to be our reconciling items then we're going to say that we expect that there's that there's going to be some outstanding checks here and we're just going if we can reconcile exactly what those are then we can double check that all other items that we have recorded here are correct and have been verified by an outside third party and a very dependable one the bank so what we're going to do is we're going to do a bank reconciliation so here's the bank reconciliation and typically in a textbook we have two sides to it we're going to have the bank balance and the book balance and we will adjust them in the bank reconciliation on quick books we didn't really have two sides and the most softwares you would and you really only have kind of the the bank reconciliation which is the one side and the reason is because everything that we're going to adjust on the books we're just going to make an adjustment for it we're actually going to fix so after we fixed it we will only be left with the bank balance side of the bank reconciliation so that'll make more set more sense in a second let's go through the bank reconciliation process what we'll first do is we'll start off with the bank balance and so as of the end of the month not the beginning of the month the end of the month here's the bank balance 109 415 so we're going to put that here this is the 109 415 and we're going to compare that to our books the ending balance on our books is way down here the 94 47 437 so that's going to be our beginning book balance so we're going to say that that's 94 437 our beginning book balance and obviously these are both as of the same date and they don't match and they're now they're never going to match because there's almost always going to be some kind of outstanding item typically so what we're going to do is just go through these items and say is it the banks problem fault or is it the books fault and put the reconciliation item in the correct area so if we do that we're going to say if we look at the bank statement first and say this 80 and this 15 these are amounts on the bank statement not on our books so this probably happened maybe we made a withdrawal from an ATM or something like that and we didn't record it and the bank service charges of course we just don't see those until we get the bank statement and then we have the bank service charges these are items that we're going to say the bank is not wrong on this or at least you know those are things we're going to have to pay for our books are the things that are going to have to be adjusted so these two items would go on the book side we're going to say okay we're going to have to fix our books our books are going to have to be adjusted for the fact that we're going to have to pay 80,000 or 80 we already took out 80 and we got to pay 15 for the service charges which they were nice enough to take out of our account already so we're going to do that by saying it's going to decrease the book balance i'm going to say the withdrawals are going to be 80 i'll put a negative 80 and then the bank service charges 15 negative 15 i'm going to go over here and highlight these and make these a lighter green saying that we have found those and put those in a particular place we put those on our book balance to make that adjustment now we're going to adjust the rest the rest of the yellow items so we have this 956 that's going to be a deposit it's a deposit on our books not on the bank statement why probably we made it at the end of the month and it has not yet cleared if we're concerned about it then we could check with the bank meaning this is actually being done for the time period into January 31st but clearly it's some period after that when we're doing the bank reconciliation sometime after February in this case and therefore we could call the bank and say hey on the bank statement as of the end of February or sometime after February did this 956 or we can check online of course clear and if it has cleared sometime in February then that's okay then we're saying okay that's good all we need to do then for the January bank reconciliation is to reconcile the fact that it's going to be a timing difference to do that we're going to go up to the bank balance up here and we're going to say that the bank balance needs to be adjusted meaning that 109 415 is not entirely accurate it's not that the bank really got it wrong it's the fact that it's just a timing difference they don't know about the fact that this deposit has happened and just hasn't cleared yet and so they're kind of wrong just from lack of knowledge and therefore we're going to make the adjustment here so this is a deposit that is included in our balance not included in the bank balance and therefore it needs to go up so we're going to put an increase here i'm going to call it an outstanding deposit and that's going to be a 956 it might be called a deposit and transit as well so i'm going to go ahead and highlight that and say we found a home for that and then a similar process is going to happen for all of these items these are going to be the checks that were written on our books that have not yet cleared the bank so these are items that we wrote a check for probably closer to the end of the month that have not yet cleared the bank once again if we're concerned with them we can call the bank and say hey did they clear after the bank closed and so then we're okay and all we have to do is really reconcile them same item here the same idea is that this account the bank balance account the bank balance account here is not really right it's it's wrong in that it doesn't include these items that we know about that the bank does not know about it's just a timing difference they will clear the bank once the bank is aware of them but they're not there yet so what we need to do is just add these up we're going to say all these items are going to be the items that are going to be outstanding checks checks we wrote that haven't cleared the bank and those are going to be items here that are included in our balance bringing our balance down not including the bank balance and therefore to reconcile we will have to decrease the bank balance so if we were to take the calculator out and just add these up then of course it would just be let's do that again the 11,000 plus the 500 plus the 360 plus the 3539 and the 3630 so it's the 1629 if I did that correctly overly and we're just we're going to do that of course with a formula though so we're just going to point and click to them so we're going to go back up here we are in cell ek6 ek6 and we're going to select equal and just point to that 11 and it's a it's a negative so it's going to be decreasing here so that's fine and then we'll say plus this 500 so it's plus a negative so it's going to and then I'm going to say plus this number plus this number plus this number and enter so it's going to look like this if I double click on it that's the formula once again I'll do it one more time I'm deleted it I'm on ek6 I'm going to select equals point to the 11,000 plus the 500 plus the 360 plus scrolling down a tad the 3539 plus the 630 and enter so there's what we have there so we're going to say then of course that we have an adjusted balance then of 109 415 minus the 16029 plus the 956 and that's going to be our balance if I did that correctly we'll do that with the sum function here if I sum this up it'll take this plus the negative or subtract that plus this so let's use the sum function we are in ek10 we're going to say equals sum double click the sum function and highlight of this column that gives us this number here and by the way we've found a home for all these so I'm going to make these a light green so we've found everything now should be no more red so or yellow so there we have that and we're going to do the same thing over here and hopefully if we say this minus this minus this it will be the same number it'll be that 94342 let's see if that's the case we're going to use the sum function by saying equals sum double click the sum function and highlight this column enter so there we have it and they tie out so now we've matched these out so we've reconciled the items we said here are the items that need to be on the bank balance that aren't included these are the items that are correct on our books that have not yet been included to the bank and need to be in order to reconcile the bank to the books these are the items on our books where they were on the bank but not on our books and they're things that we are wrong on we need to fix on our books side in order to reconcile and then we have the reconciling items I'm going to go ahead and underline these just format these just a bit we'll say double underline here double underline there and we'll have a single underline here and a single underline here and there we have that now what we're going to need to do at this point then is to adjust these amounts these two amounts are things that need to be fixed because they're not on our books and they're not a timing difference they're things that actually are going to be out of our checking account permanently so what we're going to do is actually make a journal entry related to these two items and then our ending balance will be in actuality this 94 342 we're actually going to add them in essence to the gl down here


I think that having an event like this is fantastic for young people to be exposed to and to see what the future possibilities are because it's very hard to get that otherwise because you live in your neighbourhood, you live with your family experience, you live with your teachers' experience so I think this event gives them a much wider perspective and they'll understand much more what the huge range of opportunities are to them as they go forward in life.


C-c-can't-you-see is for candle-ed to share it Corn, you care to wear it, keys that you carry Curies, bruising round the country in a car The color of cranberries, can't you see, can't you see? Call me a letter C Yeah, you did


Cindy in Indie has a question for us while browsing the web, I'm getting so tired of seeing ads and follow us links that can only be targeted targeting me from either conversations I have had, which we all know was happening, or even more bothersome gas from podcasts I listened to well at my desktop Mac. For instance, I have recently been listening to fantasy football podcasts and not talking about football with anyone. And now my Facebook feed is full of every NFL team and players, sports TV channels and all things football. Ideally, I would like to apply a keystroke or to completely turn off and on my internal microphone, either through an app, keyboard maestro, Alfred or whatever geekiness you guys suggest. Okay, I'm going to state, we're going to head down this path in a variety of ways, but I'm going to state up front that I really don't think that your Mac is listening to you. Because if it were, you would see the little microphone in use orange light, I'll call it, that sits in between the control center and the clock in the upper right corner of your Mac. That is that that orange light is on when any microphone attached to your Mac is in use and it is not there or off when it's not. If something's listening to you, so I really don't think it's your Mac for a variety of reasons, which we can get into, but if something's listening to you, it might be another device like if you have an Amazon Echo unit, the A-Lady in your house, a Google device, like those are listening all the time. There are some conjectures out there that they are using that data to do targeting. I'm also not convinced that that's the case because if that actually was happening and it were provable, they would be in so much hot water. It would be terrible for you to notice. Imagine the edge you would start seeing. Yeah, that's number one. That's right. Yeah. I just don't think that that's what's happening, but if it is, you've got those things. We've had this conversation on the show. The prediction algorithms for specifically Facebook, but lots of the, I'll call them retargeting or ad targeting technology has gotten really good and they use a lot of data to point them to know that we would be interested in one topic or another. Football season is gearing up. The preseason just ended this past weekend. I think if I'm correct about that, I think so. I'm also getting tons of football ads on my feed and it makes sense because in previous seasons, so a year ago or eight months ago, whatever it was, I've interacted with these things. I might have even posted things about a certain team or another and so Facebook doesn't forget that stuff just because it wasn't in the last two days. In fact, they have a whole profile. They know all the things I'm into. They probably know more about me accurately than I do about me, and I'm somebody who prioritizes self-awareness, but I think that's probably why you're getting all these football ads is it's the right time of the season and all of the TV streaming companies are trying to win your business by telling you, hey, if you cut the cord, you can still watch sports here, you know, like it makes sense that this is the time to spend tons of money and attention on these things, especially targeting people that they know who in the past have done it. All that said, the question is super interesting to me. You know, how do you ensure the microphone is muted, right?  You know, we understand the way light works. Okay, but with sound, you know, you might be able to figure out where the mic is on your whichever computer you have and put a, you know, piece of tape over, but that's only going to muffle it. You know, you're not going to stop the microphone from listening. So how do you ensure that your Mac can't hear you? And the answer is there's no direct way, but I have discovered a workaround in the past.  So if you happen to have like, for example, a thunderbolt dock that has a microphone jack on it, you can select that audio input device, but if there's nothing plugged into it, you're not going to get any sound.  So, but it's certainly not going to be picking up audio from the room. If you don't have one of those things, you can install something that will let you create a virtual audio device. Blackhole is a free piece of software that will create either a two channel or a 16 channel virtual device and just don't point anything at it, but select that as your sound input and that's going to be, that's it. You know, it's going to get nothing or loopback is a paid product that does the same thing, let you create actually many, many different virtual devices and you can do the same thing. Just select a loopback session or a loopback device. It's a virtual device that has nothing feeding into it. And then you're good to go. It's not going to, you know, there's no audio to be recorded.