I never really took economy lessons (well I did, in high school so it isn't worth much), and this is something I never quite understood : adam smith's invisible hand. How can we blindly believe that an largely imperfect "science" will produce consistent results over the years?
Economy is not based on any "hard science" like physics, pharmacology and stuff like that. I think most tools used are mathematical models that may or may not work (how many nobel economics were just plain wrong in their predictions?). We'll gladly take for granted a theoretical interpretation of psychology + sociology + basic mathematics and use these conclusions as arguments to create and drive our societies? That, I never understood.
Yeah, I guess since I'm more of a 'hard science' kind of girl, it is hard for me to grasp as well. Although I admit, I was quite uninterested in college.
The Nobel Prize economist (2001) Joseph E. Stiglitz says: "the reason that the invisible hand often seems invisible is that it is often not there." (Making Globalization Work, 2006) [2]. Stiglitz explains his position:
Adam Smith, the father of modern economics, is often cited as arguing for the “invisible hand” and free markets: firms, in the pursuit of profits, are led, as if by an invisible hand, to do what is best for the world. But unlike his followers, Adam Smith was aware of some of the limitations of free markets, and research since then has further clarified why free markets, by themselves, often do not lead to what is best. As I put it in my new book, Making Globalization Work, the reason that the invisible hand often seems invisible is that it is often not there.
Whenever there are “externalities”—where the actions of an individual have impacts on others for which they do not pay or for which they are not compensated—markets will not work well. Some of the important instances have been long understood—environmental externalities. Markets, by themselves, will produce too much pollution. Markets, by themselves, will also produce too little basic research. (Remember, the government was responsible for financing most of the important scientific breakthroughs, including the internet and the first telegraph line, and most of the advances in bio-tech.)
But recent research has shown that these externalities are pervasive, whenever there is imperfect information or imperfect risk markets—that is always.
Government plays an important role in banking and securities regulation, and a host of other areas: some regulation is required to make markets work. Government is needed, almost all would agree, at a minimum to enforce contracts and property rights.
The real debate today is about finding the right balance between the market and government (and the third “sector”—non-governmental non-profit organizations.) Both are needed. They can each complement each other. This balance will differ from time to time and place to place.
The greatest obstacle to discovery is not ignorance,
but the illusion of knowledge.
~Daniel Boorstin
Only a life lived for others is worth living.
~Albert Einstein
Are you denying that deregulation in the power industry broke up the integrated utilities like Con Ed that once generated power in its own plants? Because that is what happened. And I've stated several reasons in this thread why that was a bad idea.
"On January 1, 1998, following the deregulation of the utility industry in New York state, a holding company, Consolidated Edison, Inc., was formed. It is one of the nation’s largest investor-owned energy companies, with approximately $13 billion in annual revenues and $28 billion in assets. The company provides a wide range of energy-related products and services to its customers through two regulated utility subsidiaries and three competitive energy businesses. Con Edison (NYSE: ED), under a number of different corporate names, remains the longest continuously traded stock on the New York Stock Exchange. Its largest subsidiary, Consolidated Edison Company of New York, Inc. provides electric, gas and steam service to more than 3 million customers in New York City and Westchester County, New York, an area of 660 square miles (1,700 km²) with a population of nearly 9 million."
Electricity deregulation actually took the power system away from the people and handed it over to for-profit corporations. Again look what happened to the folks in San Diego when it was deregulated. It was a disaster.
I'm not denying that "deregulation" was a bad thing. What I'm saying is that there is nothing "deregulated" about it.
Sounds good in theory, but not in reality. See my previous posts on the issue.
Electricity demand is not hard to anticipate. There has not been a production shortage of electricity in any of the deregulation horror stories. There have been willful distribution strangeholds placed on electricity by private traders.
:rolleyes:
Do you deny this?
So, what is stopping folks from producing their own energy now? How would that work out for those in the bigger cities that live in high rises, etc? It isn't as simple as just producing your own energy.
What is stopping folks from producing their own energy is that energy purchasing is highly subsidized. Why in the world would anyone produce their own energy when they can get it so cheaply from the existing infrastructure?
Look, while it is undeniably true that the free market makes many valuable contributions, it is as imperfect as any other human institution, and this includes gov't. But there are industries that the free market is simply not capable of . And there are certain industries that have been complete failures when the 'genus of the market' has been applied. Hell, the airlines just came to mind. Market forces are neither good or bad, they just are. It is true that an economic system which ignores their existence (such as communism) is doomed to failure. But to believe that markets are the solution to all of our problems is delusional. I said this in my original post (or one of them) but I'll state it again, rampant privatization based upon some misguided notion that markets are always the way to go (I edited out the word 'best' just for you;)), privatization that does not proceed by first ensuring that market incentives are consistent with the public interest, doesn't do us any good. And I haven't seen any evidence to suggest, for example, that an industry such as the power industry is a naturally competitive market. I've actually only seen evidence to the contrary.
No one is saying that "markets are the solution to all of our problems". And of course you've seen evidence that the power industry is "naturally competitive". The power industry is highly competitive, today, and has been for 100 years. The problem, however, is that the actions by the state have ensured that only a few players may compete for the business of consumers and that some providers are at a huge competitive advantage not because of the superiority of their product but because of their influence or subsidized technology. Energy is a highly regulated, highly subsidized, and highly imbalanced market. Allowing private operators to produce energy in that market isn't "deregulation". It's simply outsourcing.
"On January 1, 1998, following the deregulation of the utility industry in New York state, a holding company, Consolidated Edison, Inc., was formed. It is one of the nation’s largest investor-owned energy companies, with approximately $13 billion in annual revenues and $28 billion in assets. The company provides a wide range of energy-related products and services to its customers through two regulated utility subsidiaries and three competitive energy businesses. Con Edison (NYSE: ED), under a number of different corporate names, remains the longest continuously traded stock on the New York Stock Exchange. Its largest subsidiary, Consolidated Edison Company of New York, Inc. provides electric, gas and steam service to more than 3 million customers in New York City and Westchester County, New York, an area of 660 square miles (1,700 km²) with a population of nearly 9 million."
Ha ha.......like I said, it broke up the integrated utilities like Con Ed that once generated power in its own plants. As your link stated it ushered in a new breed of entrepreneurial generating and trading companies. And like I stated earlier, the idea of creating large national markets to buy and sell electricity makes more sense as economic theory than as physics, because it consumes power to transmit power.
I'm off to work, so I'll address your other points later.
The greatest obstacle to discovery is not ignorance,
but the illusion of knowledge.
~Daniel Boorstin
Only a life lived for others is worth living.
~Albert Einstein
No one is saying that "markets are the solution to all of our problems". And of course you've seen evidence that the power industry is "naturally competitive". The power industry is highly competitive, today, and has been for 100 years. The problem, however, is that the actions by the state have ensured that only a few players may compete for the business of consumers and that some providers are at a huge competitive advantage not because of the superiority of their product but because of their influence or subsidized technology. Energy is a highly regulated, highly subsidized, and highly imbalanced market. Allowing private operators to produce energy in that market isn't "deregulation". It's simply outsourcing.
Thanks for all the efforts in this thread, FFG.
I think if there is one common theme throughout here, it is something that i tried to touch on way back on the first page regarding the Federal Reserve, the misnomer of "free markets" as they stand today, and doublespeak.
That commonality is that the government has a way of wanting people to believe because they say "A is B" that "A" really is "B". Then when everyone gets sick of "A" (which is really "B" in disguise) they go screaming and hollering, "We need B!, Down with A"!
Be it that they can't understand that the Federal Reserve is a total subversion of the free market, or that terms like "deregulation" are not anything of the sort, the people suffer from a problem that has been grossly misrepresented to them, and one which they therefore grossly misinterpret.
Of course, having misinterpreted the problem, the solutions usualy do very little to help.
:(
If I was to smile and I held out my hand
If I opened it now would you not understand?
Ha ha.......like I said, it broke up the integrated utilities like Con Ed that once generated power in its own plants. As your link stated it ushered in a new breed of entrepreneurial generating and trading companies. And like I stated earlier, the idea of creating large national markets to buy and sell electricity makes more sense as economic theory than as physics, because it consumes power to transmit power.
I'm off to work, so I'll address your other points later.
Ha ha? You asked me if I deny these facts. I don't. But do not confuse "entrepreneurial generation and trading" with good. Just because something is "entrepreneurial" does not make it a good thing and just because a situation creates an entrepreneur does not make it a healthy market.
terms like "deregulation" are not anything of the sort
This is exactly correct and exactly the problem with so-called "deregulation" and "privatization" efforts. The fact that anyone can look at either of those two industries and refer to them as either "deregulated" or "private" is completely preposterous. There is nothing unique about either market that would not allow them to operate freely. However, so long as people continue to want to directly control those markets in order to achieve their own personal goals, those markets will not be either "deregulated" nor "private".
I really have no idea how to even approach these kinds of discussions anymore as people's views on them completely confound me. I was having a conversation with someone the other day about healthcare and she kept referring to the current healthcare system as a "failure of private enterprise". I kept trying to get her to explain why she thought the healthcare system was a private entreprise and all I got back was the fact that someone, somewhere was making a profit and therefore the healthcare market was private. It made me simply want to bang my head against a wall.
The fact remains that all markets require influence to operate. A "free market" is not a market that operates in a vacuum. There's no such thing as an "unfree market" -- there are only crippled markets wherein governments, providers and/or consumers refuse to recognize that they are getting exactly what they are asking for. The energy or healthcare markets are not somehow unique in this fact and simply slapping a "deregulated" or "private" stamp upon them does not make them either deregulated nor private.
Furthermore, a "free market" is not some kind of universal panacea. Free markets fail to deliver on all sorts of things people value. What a free market allows for, however, is for each individual player to hold on to their actual values and seek them in the marketplace. Along with that comes all sorts of benefits and all sorts of pitfalls. Anyone who claims that a free market is unequivocally good or that a free market is unequivocally bad is showing their hand as someone who is seeking to impose their values on another person within the marketplace. Referring to such markets as "good" or "bad" is akin to referring to gravity as "good" or "bad".
Ha ha? You asked me if I deny these facts. I don't. But do not confuse "entrepreneurial generation and trading" with good. Just because something is "entrepreneurial" does not make it a good thing and just because a situation creates an entrepreneur does not make it a healthy market.
When I made the statement, you said 'not really' which I took as you didn't agree with me. As far as your last statement, isn't that what I've been saying the whole thread? I mean, the last paragraph in your post in drifting was pretty much what I stated to you in a post here..............you know, the thing about markets being neither bad or good, etc, etc.
So why was the power industry regulated to begin with? Was it because it became a monopoly and that allowed price control? My concern is that there may be a 'natural' tendency toward monopolies in this industry? I understand that you and drifting don't believe any deregulation happened, but deregulation is what happened it resulted in the mess in the northeast & California.
I realize that regulation discouraged the development of renewable and other innovative energy sources because companies attempting to develop such new technologies did not have access to the country's power system. I appreciate that concern. But to me, 'throwing it out' to the free market has not worked. Like I mentioned before, where I grew up in the southeast the power industry has remained under the federal/state regulation system and has kept up with demand and produced electricity at relatively stable prices over a long period of time and has provided a pretty a stable financial return for investors. What is the solution to this other than just tear down the power lines?
The greatest obstacle to discovery is not ignorance,
but the illusion of knowledge.
~Daniel Boorstin
Only a life lived for others is worth living.
~Albert Einstein
When I made the statement, you said 'not really' which I took as you didn't agree with me.
I didn't agree with your assertions that deregulation created a crop of new entrepeneurs in any good sense. Deregulation largely created new branches of old organizations seeking to game the regulator's foolish system as opposed to providing any real value (ie Enron.)
As far as your last statement, isn't that what I've been saying the whole thread?
Somewhat, yes. Which is why in my original reply I said I didn't disagree much with you here.
I mean, the last paragraph in your post in drifting was pretty much what I stated to you in a post here..............you know, the thing about markets being neither bad or good, etc, etc.
Your first post was full of "good" and "bad" and "well" and "interest" and all sorts of value judgements relative to markets.
So why was the power industry regulated to begin with?
That's a pretty broad question since regulation happened at many levels. Typically, power was regulated locally because cities and towns assumed the roles of generator. In other places it was regulated for public safety concerns. In other places is was regulated for price concerns. In other places it was regulated because of environmental concerns.
Was it because it became a monopoly and that allowed price control?
Energy, in terms of electricity, has almost always been monopoly-run. Did you choose your power company, or was it chosen for you?
My concern is that there may be a 'natural' tendency toward monopolies in this industry? I understand that you and drifting don't believe any deregulation happened, but deregulation is what happened it resulted in the mess in the northeast & California.
That isn't "deregulation", baraka. It's simply referred to as "deregulation". You would need a month to read through all the regulations that exist on power generation, transmission and delivery in the state of California.
I realize that regulation discouraged the development of renewable and other innovative energy sources because companies attempting to develop such new technologies did not have access to the country's power system. I appreciate that concern. But to me, 'throwing it out' to the free market has not worked.
That's simply a red herring. Energy was not "thrown out to the free market". Energy production and trading was given to a set of preferred providers chosen by the state and operating under the rules the state set forth. This is like referring to internal Venezuelan oil production as "thrown to the free market". It's ridiculous.
Like I mentioned before, where I grew up in the southeast the power industry has remained under the federal/state regulation system and has kept up with demand and produced electricity at relatively stable prices over a long period of time and has provided a pretty a stable financial return for investors. What is the solution to this other than just tear down the power lines?
A market is only going to be as competitive as the environment allows. When you have one set of power lines terminating at a single production facility and rules in place that prevent the construction of other production facilties, do not then complain about a "free market" that gives you production monopolies, regulator cronyism, and rogue commodoties trading. The electricity infrastructure that exists combined with the regulations in place create a monopoly-centric market. My "tear down the power lines" is simply the message of "stop hating when you get what you're asking for". But until you recognize that when a market continues to operate with more subsidies, public ownership and regulations than you can count that it is not "deregulated" or "privatized", these discussions are pretty pointless.
That's simply a red herring. Energy was not "thrown out to the free market". Energy production and trading was given to a set of preferred providers chosen by the state and operating under the rules the state set forth. This is like referring to internal Venezuelan oil production as "thrown to the free market". It's ridiculous.
It is not a red herring...............the power industry was indeed deregulated. Now if you were to say, 'well, it wasn't deregulated as much as I'd like or in a way that I would have liked' then OK, but don't pretend that no deregulation took place because you didn't like the outcomes. You can Google power deregulation and find many articles on the matter with deregulation plans, some in align more with your point of view, some with mine. What I'm saying is I'm concerned that with an industry like this, complete deregulation might produce less than ideal outcomes.
I asked you why all the regulations in the first place? You could really didn't answer it........ Could it have been because of the all the variables I mentioned earlier in the thread, that it tends toward monopoly due to these variables? If so, do we want the gov't in control or some private company like Enron? Is that the question?
You say that it hasn't been 'completely' deregulated (you can't deny deregulation has happened), so you think these concerns are pointless, yet you seem to have great confidence that 'complete' deregulation will be the answer. Perhaps that is the problem and you know, I can't tell you if deregulating utilities completely will necessarily lead to lower-cost, more efficient electricity service, etc. But, a priori, neither can you. All I know is in the Southeast, we never seemed to have many problems, certainly not like the northeast or California with their problems after deregulation took place.
The greatest obstacle to discovery is not ignorance,
but the illusion of knowledge.
~Daniel Boorstin
Only a life lived for others is worth living.
~Albert Einstein
It is not a red herring...............the power industry was indeed deregulated. Now if you were to say, 'well, it wasn't deregulated as much as I'd like or in a way that I would have liked' then OK, but don't pretend that no deregulation took place because you didn't like the outcomes. You can Google power deregulation and find many articles on the matter with deregulation plans, some in align more with your point of view, some with mine. What I'm saying is I'm concerned that with an industry like this, complete deregulation might produce less than ideal outcomes.
No deregulation did take place unless you consider modifying and expanding existing regulations "deregulation".
What has largely taken place is so-called "privatization", wherein state-run monopolies are turned into privately run monopolies deigned by the state. And nothing more than that could take place so long as states and/or localities enforce power generation and distribution monopolies. Again, if this market is "deregulated", how come you can find a greater volume of price, environmental, and distribution regulations than ever? Furthermore, if it is "privatized", why can't any private individual or entity enter the market?
You're simply grapsing at political language and assuming it means what it implies and then suggesting that power cannot be delivered via a "free market".
I asked you why all the regulations in the first place? You could really didn't answer it........ Could it have been because of the all the variables I mentioned earlier in the thread, that it tends toward monopoly due to these variables? If so, do we want the gov't in control or some private company like Enron? Is that the question?
The only reason that electricity distribution tends toward monopoly is because the electricity infrastructure in this country was built for monopolies. In nearly every locality in the United States, power lines and generation facilities were built by local and/or state governments with the intention that they would be the sole producer of electricity. So-called privatization and deregulation efforts have not changed that. So long as the state is controlling either the entire market or part of it, there have to be regulations in place. Add onto that the enrivonmental and safety concerns and that's why you have regulations.
To answer your final question, I don't want either the government or Enron in charge of my electricity. The nice thing about Enron is that at least when they fuck up, they go out of business. The sad thing about the government is that it can't go out of business and, as part of that, feels free to engineer situations where their cronies at places like Enron can grab at millions of consumer dollars wherein the consumer has little to no choice about.
Again, tell me, did you choose your power provider or was it chosen for you? And, if the former, why?
You say that it hasn't been 'completely' deregulated (you can't deny deregulation has happened), so you think these concerns are pointless, yet you seem to have great confidence that 'complete' deregulation will be the answer. Perhaps that is the problem and you know, I can't tell you if deregulating utilities completely will necessarily lead to lower-cost, more efficient electricity service, etc. But, a priori, neither can you. All I know is in the Southeast, we never seemed to have many problems, certainly not like the northeast or California with their problems after deregulation took place.
I'm not telling you that "complete deregulation is the answer". "Answer" would imply a question and you're not posing one. Complete deregulation would be very positive in many senses and very negative in others.
Comments
Yeah, I guess since I'm more of a 'hard science' kind of girl, it is hard for me to grasp as well. Although I admit, I was quite uninterested in college.
'The Invisible Hand'.....I like that! This part of your link sums up what I believe: http://en.wikipedia.org/wiki/Invisible_hand#Criticism
The Nobel Prize economist (2001) Joseph E. Stiglitz says: "the reason that the invisible hand often seems invisible is that it is often not there." (Making Globalization Work, 2006) [2]. Stiglitz explains his position:
Adam Smith, the father of modern economics, is often cited as arguing for the “invisible hand” and free markets: firms, in the pursuit of profits, are led, as if by an invisible hand, to do what is best for the world. But unlike his followers, Adam Smith was aware of some of the limitations of free markets, and research since then has further clarified why free markets, by themselves, often do not lead to what is best. As I put it in my new book, Making Globalization Work, the reason that the invisible hand often seems invisible is that it is often not there.
Whenever there are “externalities”—where the actions of an individual have impacts on others for which they do not pay or for which they are not compensated—markets will not work well. Some of the important instances have been long understood—environmental externalities. Markets, by themselves, will produce too much pollution. Markets, by themselves, will also produce too little basic research. (Remember, the government was responsible for financing most of the important scientific breakthroughs, including the internet and the first telegraph line, and most of the advances in bio-tech.)
But recent research has shown that these externalities are pervasive, whenever there is imperfect information or imperfect risk markets—that is always.
Government plays an important role in banking and securities regulation, and a host of other areas: some regulation is required to make markets work. Government is needed, almost all would agree, at a minimum to enforce contracts and property rights.
The real debate today is about finding the right balance between the market and government (and the third “sector”—non-governmental non-profit organizations.) Both are needed. They can each complement each other. This balance will differ from time to time and place to place.
but the illusion of knowledge.
~Daniel Boorstin
Only a life lived for others is worth living.
~Albert Einstein
http://en.wikipedia.org/wiki/Consolidated_Edison
"On January 1, 1998, following the deregulation of the utility industry in New York state, a holding company, Consolidated Edison, Inc., was formed. It is one of the nation’s largest investor-owned energy companies, with approximately $13 billion in annual revenues and $28 billion in assets. The company provides a wide range of energy-related products and services to its customers through two regulated utility subsidiaries and three competitive energy businesses. Con Edison (NYSE: ED), under a number of different corporate names, remains the longest continuously traded stock on the New York Stock Exchange. Its largest subsidiary, Consolidated Edison Company of New York, Inc. provides electric, gas and steam service to more than 3 million customers in New York City and Westchester County, New York, an area of 660 square miles (1,700 km²) with a population of nearly 9 million."
I'm not denying that "deregulation" was a bad thing. What I'm saying is that there is nothing "deregulated" about it.
Electricity demand is not hard to anticipate. There has not been a production shortage of electricity in any of the deregulation horror stories. There have been willful distribution strangeholds placed on electricity by private traders.
Do you deny this?
What is stopping folks from producing their own energy is that energy purchasing is highly subsidized. Why in the world would anyone produce their own energy when they can get it so cheaply from the existing infrastructure?
No one is saying that "markets are the solution to all of our problems". And of course you've seen evidence that the power industry is "naturally competitive". The power industry is highly competitive, today, and has been for 100 years. The problem, however, is that the actions by the state have ensured that only a few players may compete for the business of consumers and that some providers are at a huge competitive advantage not because of the superiority of their product but because of their influence or subsidized technology. Energy is a highly regulated, highly subsidized, and highly imbalanced market. Allowing private operators to produce energy in that market isn't "deregulation". It's simply outsourcing.
Ha ha.......like I said, it broke up the integrated utilities like Con Ed that once generated power in its own plants. As your link stated it ushered in a new breed of entrepreneurial generating and trading companies. And like I stated earlier, the idea of creating large national markets to buy and sell electricity makes more sense as economic theory than as physics, because it consumes power to transmit power.
I'm off to work, so I'll address your other points later.
but the illusion of knowledge.
~Daniel Boorstin
Only a life lived for others is worth living.
~Albert Einstein
Thanks for all the efforts in this thread, FFG.
I think if there is one common theme throughout here, it is something that i tried to touch on way back on the first page regarding the Federal Reserve, the misnomer of "free markets" as they stand today, and doublespeak.
That commonality is that the government has a way of wanting people to believe because they say "A is B" that "A" really is "B". Then when everyone gets sick of "A" (which is really "B" in disguise) they go screaming and hollering, "We need B!, Down with A"!
Be it that they can't understand that the Federal Reserve is a total subversion of the free market, or that terms like "deregulation" are not anything of the sort, the people suffer from a problem that has been grossly misrepresented to them, and one which they therefore grossly misinterpret.
Of course, having misinterpreted the problem, the solutions usualy do very little to help.
:(
If I opened it now would you not understand?
Ha ha? You asked me if I deny these facts. I don't. But do not confuse "entrepreneurial generation and trading" with good. Just because something is "entrepreneurial" does not make it a good thing and just because a situation creates an entrepreneur does not make it a healthy market.
This is exactly correct and exactly the problem with so-called "deregulation" and "privatization" efforts. The fact that anyone can look at either of those two industries and refer to them as either "deregulated" or "private" is completely preposterous. There is nothing unique about either market that would not allow them to operate freely. However, so long as people continue to want to directly control those markets in order to achieve their own personal goals, those markets will not be either "deregulated" nor "private".
I really have no idea how to even approach these kinds of discussions anymore as people's views on them completely confound me. I was having a conversation with someone the other day about healthcare and she kept referring to the current healthcare system as a "failure of private enterprise". I kept trying to get her to explain why she thought the healthcare system was a private entreprise and all I got back was the fact that someone, somewhere was making a profit and therefore the healthcare market was private. It made me simply want to bang my head against a wall.
The fact remains that all markets require influence to operate. A "free market" is not a market that operates in a vacuum. There's no such thing as an "unfree market" -- there are only crippled markets wherein governments, providers and/or consumers refuse to recognize that they are getting exactly what they are asking for. The energy or healthcare markets are not somehow unique in this fact and simply slapping a "deregulated" or "private" stamp upon them does not make them either deregulated nor private.
Furthermore, a "free market" is not some kind of universal panacea. Free markets fail to deliver on all sorts of things people value. What a free market allows for, however, is for each individual player to hold on to their actual values and seek them in the marketplace. Along with that comes all sorts of benefits and all sorts of pitfalls. Anyone who claims that a free market is unequivocally good or that a free market is unequivocally bad is showing their hand as someone who is seeking to impose their values on another person within the marketplace. Referring to such markets as "good" or "bad" is akin to referring to gravity as "good" or "bad".
When I made the statement, you said 'not really' which I took as you didn't agree with me. As far as your last statement, isn't that what I've been saying the whole thread? I mean, the last paragraph in your post in drifting was pretty much what I stated to you in a post here..............you know, the thing about markets being neither bad or good, etc, etc.
So why was the power industry regulated to begin with? Was it because it became a monopoly and that allowed price control? My concern is that there may be a 'natural' tendency toward monopolies in this industry? I understand that you and drifting don't believe any deregulation happened, but deregulation is what happened it resulted in the mess in the northeast & California.
I realize that regulation discouraged the development of renewable and other innovative energy sources because companies attempting to develop such new technologies did not have access to the country's power system. I appreciate that concern. But to me, 'throwing it out' to the free market has not worked. Like I mentioned before, where I grew up in the southeast the power industry has remained under the federal/state regulation system and has kept up with demand and produced electricity at relatively stable prices over a long period of time and has provided a pretty a stable financial return for investors. What is the solution to this other than just tear down the power lines?
but the illusion of knowledge.
~Daniel Boorstin
Only a life lived for others is worth living.
~Albert Einstein
I didn't agree with your assertions that deregulation created a crop of new entrepeneurs in any good sense. Deregulation largely created new branches of old organizations seeking to game the regulator's foolish system as opposed to providing any real value (ie Enron.)
Somewhat, yes. Which is why in my original reply I said I didn't disagree much with you here.
Your first post was full of "good" and "bad" and "well" and "interest" and all sorts of value judgements relative to markets.
That's a pretty broad question since regulation happened at many levels. Typically, power was regulated locally because cities and towns assumed the roles of generator. In other places it was regulated for public safety concerns. In other places is was regulated for price concerns. In other places it was regulated because of environmental concerns.
Energy, in terms of electricity, has almost always been monopoly-run. Did you choose your power company, or was it chosen for you?
That isn't "deregulation", baraka. It's simply referred to as "deregulation". You would need a month to read through all the regulations that exist on power generation, transmission and delivery in the state of California.
That's simply a red herring. Energy was not "thrown out to the free market". Energy production and trading was given to a set of preferred providers chosen by the state and operating under the rules the state set forth. This is like referring to internal Venezuelan oil production as "thrown to the free market". It's ridiculous.
A market is only going to be as competitive as the environment allows. When you have one set of power lines terminating at a single production facility and rules in place that prevent the construction of other production facilties, do not then complain about a "free market" that gives you production monopolies, regulator cronyism, and rogue commodoties trading. The electricity infrastructure that exists combined with the regulations in place create a monopoly-centric market. My "tear down the power lines" is simply the message of "stop hating when you get what you're asking for". But until you recognize that when a market continues to operate with more subsidies, public ownership and regulations than you can count that it is not "deregulated" or "privatized", these discussions are pretty pointless.
It is not a red herring...............the power industry was indeed deregulated. Now if you were to say, 'well, it wasn't deregulated as much as I'd like or in a way that I would have liked' then OK, but don't pretend that no deregulation took place because you didn't like the outcomes. You can Google power deregulation and find many articles on the matter with deregulation plans, some in align more with your point of view, some with mine. What I'm saying is I'm concerned that with an industry like this, complete deregulation might produce less than ideal outcomes.
I asked you why all the regulations in the first place? You could really didn't answer it........ Could it have been because of the all the variables I mentioned earlier in the thread, that it tends toward monopoly due to these variables? If so, do we want the gov't in control or some private company like Enron? Is that the question?
You say that it hasn't been 'completely' deregulated (you can't deny deregulation has happened), so you think these concerns are pointless, yet you seem to have great confidence that 'complete' deregulation will be the answer. Perhaps that is the problem and you know, I can't tell you if deregulating utilities completely will necessarily lead to lower-cost, more efficient electricity service, etc. But, a priori, neither can you. All I know is in the Southeast, we never seemed to have many problems, certainly not like the northeast or California with their problems after deregulation took place.
but the illusion of knowledge.
~Daniel Boorstin
Only a life lived for others is worth living.
~Albert Einstein
No deregulation did take place unless you consider modifying and expanding existing regulations "deregulation".
What has largely taken place is so-called "privatization", wherein state-run monopolies are turned into privately run monopolies deigned by the state. And nothing more than that could take place so long as states and/or localities enforce power generation and distribution monopolies. Again, if this market is "deregulated", how come you can find a greater volume of price, environmental, and distribution regulations than ever? Furthermore, if it is "privatized", why can't any private individual or entity enter the market?
You're simply grapsing at political language and assuming it means what it implies and then suggesting that power cannot be delivered via a "free market".
The only reason that electricity distribution tends toward monopoly is because the electricity infrastructure in this country was built for monopolies. In nearly every locality in the United States, power lines and generation facilities were built by local and/or state governments with the intention that they would be the sole producer of electricity. So-called privatization and deregulation efforts have not changed that. So long as the state is controlling either the entire market or part of it, there have to be regulations in place. Add onto that the enrivonmental and safety concerns and that's why you have regulations.
To answer your final question, I don't want either the government or Enron in charge of my electricity. The nice thing about Enron is that at least when they fuck up, they go out of business. The sad thing about the government is that it can't go out of business and, as part of that, feels free to engineer situations where their cronies at places like Enron can grab at millions of consumer dollars wherein the consumer has little to no choice about.
Again, tell me, did you choose your power provider or was it chosen for you? And, if the former, why?
I'm not telling you that "complete deregulation is the answer". "Answer" would imply a question and you're not posing one. Complete deregulation would be very positive in many senses and very negative in others.