How the Free Market Rocked the Grid 551
sean_nestor sends in a story at IEEE Spectrum that begins:
"Most of us take for granted that the lights will work when we flip them on, without worrying too much about the staggeringly complex things needed to make that happen. Thank the engineers who designed and built the power grids for that — but don't thank them too much. Their main goal was reliability; keeping the cost of electricity down was less of a concern. That's in part why so many people in the United States complain about high electricity prices. Some armchair economists (and a quite a few real ones) have long argued that the solution is deregulation. After all, many other US industries have been deregulated — take, for instance, oil, natural gas, or trucking — and greater competition in those sectors swiftly brought prices down. Why not electricity?"
No More Deregulation (Score:5, Insightful)
No, the solution is MORE regulation, not less.
The rates need to be regulated, and the private companies need to be taken over by nonprofit public organizations.
Every time deregulation is tried, consumers get shafted.
Re:No More Deregulation (Score:5, Informative)
Re:No More Deregulation (Score:4, Informative)
The system you describe is exactly what we have in Texas. The only thing we got out of deregulation is a bunch of sleazy 'energy companies' that don't do anything more than tack on sleazy and underhanded fees to our electric bill.
Thanks to this scheme Texans pay higher prices for our electricity than surrounding states. Fortunately for our corrupt politicians like Rick Perry, most Texans are too dumb to notice that we've been taken advantage of.
When you consider that Governor Perry still managed to get re-elected after skipping the only debate against Democrat Bill White, its clear that Texas is the perfect state to let the 'free market' raise costs for everyone while the ignorant masses cheer them on.
Don't forget Enron (Score:4, Interesting)
They pushed for deregulation, then prices started to skyrocket, and blackout/brownouts followed.
Re:No More Deregulation (Score:5, Informative)
Re:No More Deregulation (Score:5, Insightful)
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How do you use the terms "free market" and "force competition" in the same thought? Are you sure that YOU understand "free market"? A free market is a market free from regulation, of any sort. In a FREE market, companies are FREE to tack on whatever fees they want.
Re:No More Deregulation (Score:4, Informative)
Re:No More Deregulation (Score:4, Insightful)
Very true and a proven principle over and over again. Unfortunately, markets like electrical power generation are susceptible to the greed factor due to the virtual impossibility of end consumers using their wallets to regulate with natural market forces. Governmental regulation is absolutely necessary to have a viable electrical power market supplying consumers and industry.
Case in point, is the California electricity crisis [wikipedia.org] that stemmed from naive deregulation of power generation and unnatural manipulation of the market to raise prices. Of course there are many that claim it failed because the price hikes were not propagated to the end consumers but this is a crock because the end result would not have been an end to the manipulation it would have meant many consumers would have to do without electricity, many businesses would go out of business due to costs, and those who could pay would be stuck paying artificially high prices due to the concerted manipulation by Enron and power generators to increase their profits. It turned into a greed driven market even though there were "competing" power generators.
Re:No More Deregulation (Score:4, Interesting)
companies are FREE to tack on whatever fees they want.
Companies? You mean, like, government-chartered corporations? A free market wouldn't have these artificial liability-limiting entities :)
The free market is an imaginary ideal - not something that ever really existed.
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It isn't big government that is the problem. Competition is expensive. Companies will never compete on direct pricing or compete by providing the profit cutting benefits consumers want.
It is far far more profitable to have a gentleman's understanding on these things and give the consumer the choice between a turd and a shit sandwich. Instead of one lousy electric company you will have two or three lousy electric companies who all agree that profit margins should be higher.
Eventually they will succeed in pit
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So electrical free market. The existing electrical supply company owns all the power lines for say 200 miles. You are free to disconnect and pay another company say 200 million dollars to run a power line that distance and perhaps a couple million dollars per year maintenance fee but hey you get cheaper electricity.
So free market never existed for essential services like roads, water, sewer, storm water, electricity and wired communications. To privatise any of them is to immediately establishes localise
Re:No More Deregulation (Score:5, Interesting)
You're using a different definition of "free market" from the one referred to by GP, and the people replying to your post also disagree with you on that. Unfortunately, the term itself is ambiguous. To quote Wikipedia [wikipedia.org]:
The meaning of "free" market has varied over time and between economists, the ambiguous term "free" facilitating reuse. To illustrate the ambiguity: classical economists such as Adam Smith believed that an economy should be free of monopoly rents, while proponents of laissez faire believe that people should be free to form monopolies. In this article "free market" is largely identified with laissez faire, though alternative senses are discussed in this section and in criticism. The identification of the "free market" with "laissez faire" was notably used in the 1962 Capitalism and Freedom, by economist Milton Friedman, which is credited with popularizing this usage.
In the classical economics of such figures as Adam Smith and David Ricardo, "free markets" meant "free of unnecessary charges" and a "market free from monopoly power, business fraud, political insider dealing and special privileges for vested interests". A "free market" particularly meant one free of foreign debt; as discussed in The Wealth of Nations. Alternatively, stated, it was a market freed from Feudalism and serfdom, or more formally, one free of economic rent, in the formulation by David Ricardo of the Law of Rent.
As rightly noted, though, in contemporary usage the term usually means "laissez-faire".
Re:No More Deregulation (Score:5, Informative)
Comment removed (Score:5, Interesting)
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People who get paid to maintain and build the grid... by charging for it. This isn't rocket science.
It worked so well in California... (Score:5, Informative)
Blindly recommending deregulation on a commodity that is bought and sold in an a marketplace that promotes investing and speculation instead of direct production, distribution, and consumption creates a situation that will blow up unless it is regulated in some fashion.
(Of course the SEC has shown it can really keep a handle on this type of thing... hmmm... uhhh, urrrk...
Re:It worked so well in California... (Score:5, Informative)
What was the worst thing about California, it was regulation that brought about the shortages that caused the price spike. Retail prices were fixed. Fuel costs went up. Unprofitable generation went offline for for repairs, maintenance, or upgrades, or simply shut down.
This was followed by a mild heat wave. The result was rolling blackouts as the cheap efficient sources were inadequate. New generation and transmission was not built due to lack of profit.
This lead to buying power on the spot market. Due to the price caps on the retail level and no caps on the wholesale level, and mandatory supply contracts, local governments were required to buy energy at the spike in the spot market and sell at fixed retail. This is where the meltdown started.
To make matters worse, the delivery was choked by an undersized transmission line in a corridor. This path 66 limited the amount of lower cost power that could be purchased from neighboring states. This made the local spot prices even more volatile.
This reliability report lists the issues of the two corridors for power into the Southern California area.
http://www.electripedia.info/reliability.asp [electripedia.info]
Re:No More Deregulation (Score:5, Informative)
In Alberta, Canada we have deregulation. Production, transmission and sales are 3 separate entities. You buy from whoever you want. Transmission and consumption are charged as separate items on the bill. Both charges have a fixed rate and a variable rate based on usage. The power bills have more than doubled. The sales people tell customers we can lock you in for 3 - 5 years because rates are going way up. The lock in ends up being higher than the regulated rate (This was kept for those who didn't sign up).
We could buy power and gas from a British company that didn't have any gas wells, pipelines, generators, or wires in Canada.
Re:No More Deregulation (Score:5, Informative)
We've got the same scheme in Texas. Electric bills changed from being a simple "Your used X KWH last month, pay us X * 0.10 dollars" to being like cell phone contracts with opaque pricing models, multitudinous fees, taxes, and surcharges, two-year commitments (with early termination fees), etc. Unsurprisingly, we now pay more on average than people in surrounding states where electricity is provided by a monopoly public utility...
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There is no such thing as deregulation. Markets are regulated by their customers. The only way to get deregulation is to NOT regulate by government, and yet force the customers to buy anyway. And gee, that's exactly what happened in California when it deregulated.
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On top of that if none of the providers are willing to offer what the customers want, it won't happen. In a regulated economy, what tends to happen is the government steps in and provides it at tax payer expense.
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My power is provided by a government owned corporation. Not only do I get some of the cheapest power in N. America but it almost always turns a profit, sometimes a very large profit and very occasionally a small loss. ( http://en.wikipedia.org/wiki/BC_Hydro#Financial_performance [wikipedia.org] )
Re:No More Deregulation (Score:5, Informative)
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Okay, but note that we're talking about linear infrastructure here. It's a hard problem to solve no matter who's doing it. No matter how you solve it, 1) there will be problems and 2) people hankering to solve it the other way.
Re:No More Deregulation (Score:5, Insightful)
The regulation vs deregulation discussion is stupid. There are things that need to be regulated (banks shouldn't be allowed to play casino with my money) and there are things that need to be deregulated. Good politics is about choosing wisely between them. Dumb politicians who claim that regulating/deregulating everything will solve all problems only mess everything up.
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Dumb politicians only mess everything up.
You had some superfluous words in there, so I tidied it up for you.
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Your solution has been tried too, in dozens of countries. It generally results in massive corruption, and such a complete lack of funds for maintenance of the electrical grid that power outages of several hours a day is the norm.
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We do the same thing here in the US when gas gets too expensive for our cheap ov
Insane Deregulation Amnesia (Score:5, Informative)
Seth Blumsack, the author of that offensive lie, should be forced to read aloud the live data feed of the oil and gas market prices. For the rest of his life. Oil and gas prices have skyrocketed without regulations protecting us from speculators, supply side manipulation, and every other kind of abuse the market manipulators cook up. Trucking is a random example of an industry never properly regulated enough that is also not actually deregulated.
But right there under lying Blumsack's byline is a cluster of pictures of Enron creating a faked energy crisis in California, because deregulation allowed it. Of course, that crisis also required Bush and his lying "free marketeers" to be running the Federal government, which is obligated to protect one state from interstate commerce abuses that damage it - which is what Texas deregulation allowed by keeping Enron's practices and books secret, even though California's deregulation required opening them.
Re:No More Deregulation (Score:5, Informative)
I sent this in to Slashdot yesterday and it was, of course, not used.
http://www.businessweek.com/news/2010-12-23/why-businesses-can-t-stand-free-markets-veronique-de-rugy.html [businessweek.com]
It's a great article in Bloomberg businessweek about how so many companies DON'T want a free market and all the hypocrisy going around about the term...
Re:No More Deregulation (Score:5, Informative)
Did not the state of California try this with tragic consequences? Rolling blackouts to keep prices artificially high.
No. California basically setup a system that was guaranteed to fail. They split generation from distribution, capped prices to customers but allowed the generators to charge market rates to distribution companies, mandated service for all, prevent companies from entering long term supply contracts; and then sat back and disavowed involvement when things went to hell.
CA is essentially two islands when it comes to power - once he inter-ties were fully loaded no more power could be imported and prices(to the distributors) rose as higher price units went online. When they couldn't pass on the costs, and as a result end users weren't driven to cut consumption which would lower demand and prices, bankruptcies ensued. Politicians screamed. Babies cried.
Couple that with companies such as Enron doing roundtrips to drive up prices and things went south quickly.
There were people who said that would happen - but they were largely ignored. Oh well.
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California did implement deregulation [wikipedia.org]. Power generation was split into multiple competing companies.
Distribution is a natural monopoly, without splitting the two then you do not have a free market, you have no competition, prices will increase to the maximum sustainable profit to consumer who can afford the rates ratio.
Read the results of investigations, inter-ties were not fully loaded, the bookings wer
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Libertarians have spent the last ten years trying to explain to all us rubes how the California deregulation wasn't real deregulation. They remind me of all those Marxists who go around claiming that Lenin, Stalin and Mao weren't real Communists. It's the same "Oh crap, a bad thing happened with our pet economic policy, so let's just conveniently alter definitions so our economic policy smells like a rose again."
In the real world, not the fantasy land of ideologues, a certain amount of pragmatism and comp
Re:No More Deregulation (Score:5, Insightful)
You free market nuts are just like the communists. You claim that your system is the best but there are tons of examples where it has failed but none of where it has succeeded. I would ask you why you expect that it would work differently this time, but I know what your answer would be. You would point out in all the failures how it didn't follow your "perfect" free market system. Communists do the same thing (Russia did not follow the ideal communist model). The fact is that if your system does not correct itself, then it is a bad system.
Here is a metaphor for you... You can balance a ball on top of an upside down bowl, but if you push it just a little bit off of its "perfect" position then it will tumble off of the bowl. While the ball can stay balance at the top of the bowl forever, it will only stay balanced if it is in its "perfect" position. On the other hand, if you turn the bowl the other way around and put the ball exactly in the center of the bowl, it will stay there. But, if you give it a small shove, it will move back towards the center of the bowl. If your system cannot deal with imperfections in implementation, then it is useless. It has to be able to deal with corrupt politicians/businessmen, crashes in the stock market, and just people being stupid. Show me where your system has succeeded and I might give your argument some credence. But the only argument that you have is to have "faith" in your ideology. I prefer science.
Airplane tickets. (Score:4, Insightful)
Or better yet, Phone companies! My bill is as low as... Egads! It isn;t. Help!
Re:Airplane tickets. (Score:5, Informative)
Airplane tickets are fantastically cheap relative to 30 years ago when the deregulation started. You could pay $1,000 to fly coast to coast in 1980 dollars. Now, the last time I flew it was $450 in 2010 dollars.
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A 2010 dollar is worth about 1/3 of a 1980 dollar, so tickets are actually more expensive than they used to be.
http://www.dollartimes.com/calculators/inflation.htm
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Wow, I can see you learned math at a public school. If tickets used to be $1000 and are now $450 in dollars that are worth a third as much then prices are only *fifteen percent* of what they once were. That's less than *one-sixth* the former price.
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LA-Frankfurt
LA-Frankfurt
LA-Frankfurt
LA-Frankfurt
LA-Frankfurt
These were all taken in Spring.. summer prices of course are higher..
Priceline and Expedia have been helpful, and my new favorite Kayak.. Still the airlines are struggling with these "low p
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A 2010 dollar is worth about 1/3 of a 1980 dollar, so tickets are actually more expensive than they used to be.
http://www.dollartimes.com/calculators/inflation.htm
I think you have that backwards. 2010 dollars are worth about 1/3 of a 1980 dollar, granted. So if you paid $1000 in 1980 and pay $1000 now, you're still paying less now because that $1000 has a lower value than it did before.
That you're paying 45% of the previous price AND paying it with dollars that aren't worth as much means two different ways that the tickets cost less than they once did.
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The best trolls are subtle. Well played, sir.
Re:Airplane tickets. (Score:4, Interesting)
Airlines are constantly bailed out by the government (including the TSA, which was a huge airline subsidy), and they are only allowed to fly routes that the government(s) allows them to fly. They are hardly a free market.
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They're a lot more free than they used to be, and the prices are a lot lower. Do you want to see them even lower yet? Give customers more freedom to regulate.
Re:Airplane tickets. (Score:5, Interesting)
If we went back to airlines handling security, the market would handle any rogue airline that required the security people to make people choose between groping and naked scanners. That's for sure.
By taking away the choice, we have all lost freedom.
Re:Airplane tickets. (Score:4, Interesting)
Actually, there's a lot of government regulation over routes (look up 'cabotage' and 'clear skies' and the Bermuda Agreement, etc. While deregulation opened things up considerably in the U.S. (for domestic flights) in the late 70s / early 80s (there's no CAB sitting on new route applications indefinitely), you still as a commercial carrier have to contend with gate availability at the destination airport, and airports that can accommodate 737s etc. are almost all municipally owned, so, government controlled...
Yeah, with my PP-ASEL, I can hop in an Archer III and do my pre-flight and squawk 1200 and call KSMO tower, request departure runway 26, right turn at shoreline, and then do whatever the hell I want (subject to the laws of physics, the local proximity of Class A and B (and C and ...) airspace, any currently existing TFRs, etc.
But commercial flights, not so much. (Don't get me started on the Wright Amendment, portions of which are still in effect.) E.g., when Southwest wanted to expand service into Boston, they had to work with the Massachusetts Port Authority...
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You're obviously using the wrong service then. Not to mention the fact that Airlines are HEAVILY regulated.
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why SHOULDN'T they be heavily regulated? Most flights take 100s of people up on a potentially dangerous trip, and there are thousands of flights a day. I sure hope someone says they have to be safe and not gamble with my life.
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That is an excellent point, and it is precisely why the grid infrastructure and power generation ought to be decoupled.
Deregulate? (Score:2, Insightful)
You mean like Wall Street or Enron?
Uhh... (Score:4, Informative)
Such arguments were compelling enough to convince two dozen or so U.S. states to deregulate their electric industries. Most began in the mid-1990s, and problems emerged soon after, most famously in the rolling blackouts that Californians suffered through in the summer of 2000 and the months that followed. At the root of these troubles is the fact that free markets can be messy and volatile, something few took into account when deregulation began. But the consequences have since proved so chaotic that a quarter of these states have now suspended plans to revamp the way they manage their electric utilities, and few (if any) additional states are rushing to jump on the deregulation bandwagon.
Yeah, so, how about not continuing this experiment with our critical infrastructure?
Re:Uhh... (Score:5, Insightful)
From TFA:
Such arguments were compelling enough to convince two dozen or so U.S. states to deregulate their electric industries. Most began in the mid-1990s, and problems emerged soon after, most famously in the rolling blackouts that Californians suffered through in the summer of 2000 and the months that followed. At the root of these troubles is the fact that free markets can be messy and volatile, something few took into account when deregulation began. But the consequences have since proved so chaotic that a quarter of these states have now suspended plans to revamp the way they manage their electric utilities, and few (if any) additional states are rushing to jump on the deregulation bandwagon.
Yeah, so, how about not continuing this experiment with our critical infrastructure?
Not to mention that a business which a) has extremely high barriers to entry and b) is inherently a monopoly was never going to have much of a "free market" to begin with. Of course trying to force it to act contrary to its nature, by fiat, is only going to create problems.
As far as wisdom and foresight go, this is bottom-of-the-class material here.
It's amazing that there is so much debate about this. If you take a hard look at this debate, it's the same old story every time. It just gets rehashed every now and then as though it were a new issue, as though this "debate" were covering new ground. The truth is it never moves forward. It moves in circles. Really, how hard is it to understand that natural monopolies are not fertile ground for free-market principles?
I'm all for free markets. I want them to succeed. This one can't. The reason electrical service has higher prices, lower service, outages, and other problems when you try to treat them like free markets is because they are not free markets. You will never have an electrical free market until it becomes cheap, reliable, and cost-effective for each home to be "off the grid" and generate its own electricity. Until we come up with that kind of technology, we're going to need local monopolies to deliver electricity to us. Because monopolies are inherently abusive, they need reasonable regulation and close scrutiny.
Please can we stop presenting this as a new and interesting issue? It's neither. It's more like an algorithm that produces the same results each time it iterates.
There are no free markets (Score:4, Insightful)
There are no free markets. There are only markets controlled by governments and markets controlled by customers. The markets controlled by customers work out pretty well for customers. The markets controlled by governments work out pretty well for governments and the politicians that run them and the lobbyists who fund them and the corporations who make money because the politicians control the markets in their favor.
Re:There are no free markets (Score:5, Insightful)
A free market is one controlled by customers.
Just because the authoritarians have redefined "free market" to mean "laws to benefit corporations with government help" doesn't mean that the original concept no longer exists.
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But my point -- that corporations are not free to do anything they want in so-called "free" markets -- remains.
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Show me a free market in which that isn't the case and I'll show you a free market that isn't anywhere near mature.
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A genuine free markets can't exist for very long. That was established a really long time ago that a free market ends in a single source provider over every thing, assuming that there isn't a revolution and that the government doesn't step in to stop it from happening.
Show me a free market in which that isn't the case and I'll show you a free market that isn't anywhere near mature.
This is an example of the "No True Scotsman" philosophy. I can play it too. Show me a market that is "mature" and I'll show you a market that isn't a free market.
Re:There are no free markets (Score:5, Insightful)
There are also markets controlled by cartels. That's what happens when barriers to entry are high and government regulation is lax.
Suicide! (Score:2)
Some armchair economists (and a quite a few real ones) have long argued that the solution is deregulation.
You mean like they did with the telecos? Or the cable companies? Or any other kind of infrastructure? I challenge anyone here that can name a deregulation of a public utility or infrastructure that has lead to increased competition in the market in question over time.
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ITYM Linear infrastructure, which is hard to regulate whether by governments or customers. There's no magic wand.
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The telcos are not a complete failure.
You may be too young to know, but you used to not be allowed to own your own phone. You had to rent one from the government monopoly. It was a crime to hook an unapproved device to your telephone line.
Deregulation allowed people to do evil unapproved things like run BBSs in their houses and hook modems up to their phone lines. It allowed rogue networks to form like sprintnet which formed the backbone for services like AOL and compuserv.
None of this could have happen
Re:Suicide! (Score:5, Informative)
You may be too young to know, but you used to not be allowed to own your own phone. You had to rent one from the government monopoly. It was a crime to hook an unapproved device to your telephone line. Deregulation allowed people to do evil unapproved things like run BBSs in their houses and hook modems up to their phone lines.
If you're talking about the US, that's exactly backwards. It was a breach of your contract with the telephone company - which was allowed to become a monopoly by the US government - but not a crime, and it was actually government regulation that forced the phone companies to allow you to connect phones and other devices not rented from the company.
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None of this could have happened without deregulation of the telephone system. We wouldn't be having this conversation right now if we still have a government monopoly in telephone systems.
It was an AT&T rule. It was a lawsuit against AT&T that allowed third party equipment to be connected to AT&T's monopoly network, while they were still a monopoly.
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The Swedish market for telecommunication was deregulated during the 90's and is much cheaper with strong competition. We have at least three major parallel mobile networks covering almost all of the country. A lot of small telcos have sprung up selling "old copper". Before anyone brings up the old "yes, but you are such a small country, so it is different" argument, let me mention that we have a population the size of New York spread out over a country the size of Texas. Besides the
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You mean that one of these days I won't be on dialup? All due to the last 20 years of little regulation which has seen my service downgrade and my bill go up. $30 bucks a month now for a 2.64 kb/s connection. Lots of choices for long distance which I don't use so pay $5 a month for not using long distance. At least my basic bill has been pretty stable which is why now it is only 20% of the total.
IEEE discredits itself (Score:3, Insightful)
The IEEE publishing a political editorial like this really discredits them as a professional organization.
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The IEEE publishing a political editorial like this really discredits them as a professional organization.
Why?
I think they have a right and a responsibility to take stands on public issues, because they understand the science better than the general public, and better than most politicians. Public policy is an important part of science.
Most of the publications of professional societies publish editorials. When they think government policy is wrong, they say so, and explain why.
I see that in Science, Nature, New England Journal of Medicine, JAMA, and BMJ.
For example, Science had lots of editorials about the Bush
Your house must be wired (Score:2)
All other services to your house - phone, cable TV, internet, can be shipped in by other means than a hard wire now. Not electricity (or gas). By definition, some monopoly must own that last mile. This is why such services should be regulated, and the regulators be knowledgeable enough to shop for competitive rates.
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"Shop for competitive rates" implies that there is a free market, at least somewhere in your equation.
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Two words: Public Choice. Here, let me google that for you: http://lmgtfy.com?q=Public%20Choice [lmgtfy.com]
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Just because we've made a system where the utility owns the last mile, does not mean that there aren't other ways of doing it. Some which may work better and others which work worse, but which have a different set o
I'm from California, ask me... (Score:5, Interesting)
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And you would be right if it were "deregulation", but it wasn't. It was just "bad reregulation". There was never a customer-regulated market for electricity in California, so nobody can say that it failed!
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I'm sure they won't like the comparison, but it's very reminiscent of Marxists and other far-left groups saying "The Soviet Union/Mao's China/Pol Pot's Cambodia weren't truly communist". This pattern is quite common amongst ideologues of various descriptions, both on the left and right.
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Well, it depends on what kind of leftist makes said critique. Thing is, there are some fairly wildly divergent ideologies under the common umbrella of communism - not all of them are Marxists, in fact. One thing that all of the examples you've listed have in common is that they were all forms of statist communism, with a strong centralized state implementing the reforms (unsurprising, since they're all offshoots of the same ideology, the one behind the Russian revolution of 1917). To that extent, criticism
Capitalism 102 (Score:5, Informative)
<sarcasm>I am always surprised of how easily these "neocons" forget the most basic economic concepts of the system they worship... They forget things basic concepts like ROI, entry barriers and so on, as long as forgetting them favours their dogmas.</sarcasm>
In short, in Capitalism 101 we saw that, in a pure free market, if sector A has profits better than sector B, then inversions will flow from sector B to sector A, increasing supply until price drops, and profits in both sectors are the same.
In Capitalism 102, we saw that, in real life, maybe building a new enterprise in sector A is not just as easy... it may require huge inversions, a big risk (if by entering the market they lower collective profits, maybe the ROI won't be positive), and outright collusions (for example, all enterprises in sector A join and tell you "if you enter into our sector, we will presure our suppliers so nobody does provide you with the materials you need if they want to do bussiness with us").
In Campitalism 103, we all saw what happened to Enron.
In my country, the former monopoly of telcos (Telefónica, now Movistar) still is the only supplier when you need some services in some geographical areas (not by law, but the other telcos do have wanted to get the infrastructure). Sometimes when they have lost a contract with us, they have blocked providing the service through the winner to the maximum that the law allowed them (and at least we have some law forcing them to provide the service in a limit time).
Of course, some illuminated people will only repeat Capitalism 101 lessons while covering the ears to avoid realising what they are really saying...
One Word: (Score:3)
Let me get this straight... (Score:4, Insightful)
...a market for electricity will ensure nobody goes without electricity, presumably by the same process by which a housing market ensures nobody is homeless and an international food market has caused an end to world hunger.
The ideologues are back with a vengeance. After all that has happened, after the finance system collapsed (and showed that it wasn't really made of anything substantial in the first place) how can anyone still listen to market fundamentalists?
please, somewhat tag this "enron" (Score:3)
WTF, 1.5 months after the U.S. change of guard and we're already recycling Enron?
Bad call. Trust me. (Score:5, Interesting)
For a couple of years, I worked in the UK electricity industry, which was at least partially deregulated in 1998. People look at me funny when I say I've got candles and tinned food stashed away, but I expect every winter to be the one where it all comes crashing down.
A big part of the problem, at least for us poor schlubs charged with getting the billing right, was that all these deregulated entities keep getting bought and sold. And every time they do that, there's a data migration, which almost invariably gets screwed up. Bad data piles on bad data on bad data, with fixes promised but never delivered in time for the next buyout. One region in particular had one standard evening/weekend meter set-up and no fewer than four different versions of that reality in their database. The net effect was to flip their predicted e/w usage pattern upside down. That usage pattern is what gets fed into the National Grid computers for demand forecasting. See where this is going?
I'm told that the larger "half-hourly" stuff is in somewhat better shape, which is probably why the whole thing's held together so far. But if what I saw was what you can expect from a deregulated energy industry, I'd say there's good reason to be afraid...
Re: (Score:2)
I don't know any other system, at the UK one at least has the various electricity companies competing with each other pretty well. I see lots of advert for other companies, and bad press coverage when one provider lags behind with a decrease in cost.
Deregulation? Let's ask Enron! (Score:5, Insightful)
Re: (Score:3)
Just look at all the "innovation" that companies like Enron brought to a deregulated energy market! Let's ask California how well that worked out for the average consumer. While we're at it we can look at deregulatory laws like the Commodity Futures Modernization Act and the repeal of Glass-Steagal that enabled such "innovation". The "free market" for oil is now run by speculators who can buy and sell contracts for millions of barrels of oil but never have to take delivery, creating false demand and squeezing millions of dollars a day from average americans as they have to pay over $3.00/gal to fuel their vehicles. What else has deregulation done? How about all those nasty little unregulated derivatives such as MBS(mortgage backed securities) that imploded the world economy? That's financial "innovation" like the world had never seen before. All thanks to deregulation, yay!
The California electricity market wasn't completely deregulated. And the residual government power is what caused brownouts and bankrupt electricity providers to Enron's benefit.
Second, claiming that speculators are responsible for the slightly elevated price of oil (adjust for inflation [inflationdata.com]) is just a demonstration of your ignorance of the oil markets. Where in the world do you think that oil goes? If I speculate and buy a million barrels of oil, then that oil has to go somewhere. Either I have to pay someo
No such thing as a free market (Score:5, Insightful)
For the same reason "life isn't fair"
As long as 1% of the total population controls 90% of the wealth, there is no such thing as competition or free market capitalism.
I like competition and I dislike government intrusion but there is a reason FOR government and that is to protect it's citizens, that includes protection from economic crimes as well as physical ones.
The middle class is shrinking regardless of which ideology is popular that month. People are losing their homes left and right, jobs are going over seas and yet still so many people are ignorant to the real issues.
Deregulating natural monopolies doesn't solve the problem. It just hands a blank check to a corporation chosen by the government to fuck it's customers however it chooses.
Free market is an oxymoron to anyone that actually understands what the two words mean.
Re:No such thing as a free market (Score:4, Informative)
The fundamental difference between the state and all other economic actors is that the state is (or rather can be) democratic, with everyone having a voice. So it is directly controlled by the populace, unlike corporations, and - properly implemented - can be trusted to operate in the interests of the society as a whole.
Then, of course, a regulating state breaking up monopolies is not itself a monopolist, since it does not own all the property, nor fully command it.
regulations (Score:2)
There are good and bad regulations. The SOX/NOX cap and trade regulations as part of the clean air act were good regulations. The goal wasn't to reduce prices so much as make sure that our air didn't have so much Sulfur Oxides in it to make rain as "acidic as vinegar." Subsidies are bad. NIMBY regulations that obstruct wind farms, nuclear plants, recycling etc. are bad. The problem is entirely about which regulations are useful not necessarily the quantity. If regulations go far beyond what is useful
It's bad (Score:2)
The cult of deregulation... (Score:2)
... doesn't understand that technological advancement has limits, you cannot infinitely drive the cost of something down towards zero and you can't count on the universe to have some unknown undiscovered technology just waiting in the wings.
In the physical universe processes take scientifically measurable amounts of time, resources and computation to complete.
This cult of the market always forgets that natural law trumps ideology.
Wtf?! Electricity are NOT high via infrastructure (Score:2)
Uh.
Right.
Electricity prices for commercial usage in California is what? 27cents/kwh? And it's what... FIVE CENTS per kwh in Quebec?
Sure.... SUUUUURE... that's all due to regulation, or infrastructure, or reliability. Suuuure.
Sorry for the MASSIVE sarcasm, but frankly -- have you seen how large/complex Quebec's infrastructure is?
The real difference in costs here, is the cost of the power source. Hydro in Quebec's case, or the fact that California buys so much of its power from out of state ....
There ain't no free market (Score:2)
There ain't never been a free market. There ain't never gonna be a free market.
Power, water, sewer, transportation and communications will be monopolies. The question is whether they'll be regulated or not. If not, consumers will get reamed.
Requirements for Posting (Score:3, Interesting)
I wish!
In any system dominated by psychopaths. . . (Score:4, Insightful)
It doesn't matter what course you choose to take. If you leave the psychopaths in positions of power, then whatever system is used will only lead to further misery.
These problems can only be solved by the recognizing and removal of non-humans. I'd start at the banking level, remove the psychopaths from that system, undo usery, and then work down.
If the ability to experience empathy is a pre-requisite before one can be considered human, then Psychopaths are not human. They are a predator population which has embedded itself at the highest levels of power and social control. If you want to treat them kindly, then that's fine, but whatever happens, they need to be removed from their positions or we will continue to live in a state of war, poverty and misery.
-FL
Re: (Score:2)
I agree. The free market works well for most stuff, but certain things, not so well. How to tell them apart: imagine whatever service you're discussing breaking down, for instance through the bankruptcy of a private provider. Is it thinkable that the government would not have to step in and provide it? Yes: Go private. No? Go public.
So, suppose you have an electricity grid. Will people be content with blackouts? I doubt it.
Suppose you have a toy manufacturer. That seems like something for private firms to d
Re:Deregulating a bad idea for essential services (Score:5, Informative)
Nobody said those things should be free. But developed countries have measures to ensure that people can obtain them even if they couldn't afford them in a pure free market - precisely because they are essential. But that's unrelated.
Infrastructure is a prime candidate for regulation, because of its "natural monopoly" character - in the absence of regulation, it's very easy for a dominant company to squeeze everyone else out and then exploit their monopoly. Telephone and internet connections got a lot cheaper and faster here (UK) when the dominant phone company were required to let other providers use their network.
Re: (Score:3)
Where did he say it would be free?
Re: (Score:3)
Also, if the politicians put the price too low, more electricity is demanded than can be supplied (this is why there were bread lines in the USSR).
It's curious that you mention bread here. So what's the proposed free market solution to those lines, then - price the bread higher so that some of the poorer people forming those lines couldn't afford to buy it at all?
The most economically efficient electricity market...
The funny thing about "economic efficiency" is that it says absolutely nothing about how many people get shafted in it.
Re: (Score:3)
You are under a serious delusion here, let me help you out.
The "Free Market" only works in a Utopian world. In that Utopian world when it comes to energy you would have many many transmission paths and you would have many many suppliers and each consumer could choose their own supplier and transmission path and select the best deal they could find in that combination.
Real world now. You have a set of transmission paths that are pretty much fixed, it is called the Grid. You have a few BIG power generator