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Businesses Power The Almighty Buck United States

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?"
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How the Free Market Rocked the Grid

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  • Re:Airplane tickets. (Score:4, Interesting)

    by GigsVT ( 208848 ) on Friday December 24, 2010 @07:43PM (#34662706) Journal

    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.

  • by HotNeedleOfInquiry ( 598897 ) on Friday December 24, 2010 @07:48PM (#34662744)
    About deregulation and about how my butt still hurts from the Enron assrape. I'm normally a free-market kind of guy, but I learned a lesson on this one.
  • Re:Airplane tickets. (Score:5, Interesting)

    by GigsVT ( 208848 ) on Friday December 24, 2010 @07:57PM (#34662800) Journal

    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:2, Interesting)

    by Anonymous Coward on Friday December 24, 2010 @08:02PM (#34662824)

    A 2010 dollar is worth about 1/3 of a 1980 dollar, so tickets are actually more expensive than they used to be.

  • Bad call. Trust me. (Score:5, Interesting)

    by 6Yankee ( 597075 ) on Friday December 24, 2010 @08:08PM (#34662858)

    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...

  • Don't forget Enron (Score:4, Interesting)

    by sourcerror ( 1718066 ) on Friday December 24, 2010 @08:55PM (#34663100)

    They pushed for deregulation, then prices started to skyrocket, and blackout/brownouts followed.

  • by shutdown -p now ( 807394 ) on Friday December 24, 2010 @09:08PM (#34663168) Journal

    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 []:

    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".

  • by hairyfeet ( 841228 ) <> on Friday December 24, 2010 @09:13PM (#34663184) Journal

    And what you'll end up with is cartels lining up to see who can ass rape the consumer the most. See California's energy deregulation for an example. There is NO way to get a truly "free" free market because it is simply too easy and profitable to collude. See DRAM prices, LCD prices, for examples.

    Do you REALLY want cheap electricity? You do? Well the answer is simple: Tell the NIMBYs to STFU and approve the building of plenty of new nuclear reactors, as well as breeder reactors to reprocess the waste, which will take care of most of the long term storage problems. Tada! You ALL get cheap electricty, with plenty for electric cars or anything else. I live in north AR and thanks to AR Nuke 1&2 electricity is cheap enough around here many apts throw it in for free. We have plenty of uranium, nuke plants don't belch out carbon or other crap like the coal plants (which should be shut down BTW, clean coal my ass) and can crank out the juice for decades at VERY cheap prices per KWH. We just need to tell the NIMBYs to STFU and get to building, that's all. All deregulation will do is give us rolling blackouts, crazy prices which in a dead economy would be economic suicide, just ask the people of California how deregulation is working out for 'em.

  • by Derosian ( 943622 ) on Friday December 24, 2010 @10:36PM (#34663578) Homepage Journal
    Before replying in this thread you must have at least taken a Microeconomics or a Macroeconomics university level course.

    I wish!
  • by MightyYar ( 622222 ) on Friday December 24, 2010 @11:14PM (#34663708)

    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.

  • Re:Airplane tickets. (Score:4, Interesting)

    by crankyspice ( 63953 ) on Saturday December 25, 2010 @12:50AM (#34664000)

    I don't know where you determined that airlines can only fly certain government-prescribed routes. That's patently false.
    Any pilot, of any plane - airline or not - can file any path they want as long as it follows the basic FAA rules and doesn't put them through the center of a storm or hurricane or into the side of a mountain or something.

    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...

"Yeah, but you're taking the universe out of context."