In the “well, DUHHH” department…
Electricity in deregulated markets cost more then in regulated markets.
Well, DUHHH.
We could’ve all told you that when we opened our electricity bills this past month. So sayeth the NY Times:
In market states, electricity customers of all kinds, from homeowners to electricity-hungry aluminum plants, pay $48 billion more each year for power than they would have paid in states with the traditional system of government boards setting electric rates, according to … analysis of Energy Department data.
Lets all give a collective round of applause to Ken Lay, Jeff Skilling and their pals at Enron for spearheading this grand idea.
Oh, that’s right, they’re either dead or in jail.
But yet, the middle class are still dealing with this bullshit. can’t anyone bring themselves to say, “Market Failure”?
November 6th, 2007 at 3:53 pm
Nah, they’ll just say that businesses weren’t earning a fair amount under the old rules. I’m confident of that or some other equivocation because I know there are people who are so committed to the idea of the free market that they really believe it’s a reliable scientific principle like gravity.
November 6th, 2007 at 7:23 pm
30 years ago we’d call it a monopoly–today, it’s “free market economics.” However, I believe that the even our dumbed down general public will not be able to stomach the blatant policies of avarice much longer.
November 7th, 2007 at 6:23 am
tfg and bender—since my education is in fine art *coughcoughcoughdumbcoughcoughcough* i’ve decided to go back to school for economics with the goal of proving Milton Freidman and his ilk WRONG. we were lucky enough that two economists won the nobel prize this year on the basis of mechanism design. That’s a push in the right direction.
November 7th, 2007 at 8:59 am
I’m fascinated by your course of study. I think a workable economic model is important, but in a system with a weird combination of deregulation, monopolies, and a “free market” with interest rates controlled by an unelected board, it’s quite obvious that mere market forces don’t explain what’s going on.
I look forward to hearing your further insights on this topic: I wish it was one I understood better.
November 7th, 2007 at 11:09 am
Keep an eye on this place, I’ll be discussing “free market” economics and the fallacy of freedom it provides.
I understand the use of charts and analysis you see on a lot of other finance related blogs, but I’m probably going to be discussing historical aspects of market failures since we are now 11 years into major deregulation legislation. The promise of lower prices through competition hasn’t come to pass. Now they’re feeding us the bullshit line: It’s all China’s fault.
riiiight. why haven’t any of the large oil companies reinvested any of their record profits into R & D? Puuuuhhhleaase. they’re riding this wave of profitability until they can’t any further.
November 8th, 2007 at 9:09 am
It seems to me that short-term thinking of this kind (why invest in better fuels when oil makes us so much profit now?) is a huge problem with the “free market.” The market does a poor job of rewarding fiscal responsibility and long-term thinking (often those making efforts in this area are cast aside before the benefits of their work are clear) and a great job of rewarding short-term profitability.
That’s how we see execs open their golden parachutes and glide into even more money as retirement plans collapse, corperations fall apart, and the economy goes into a nosedive.
And what really freightens me is that I almost never hear free-market defenders even note that the divide between short and long term thinking is an important one. *shiver*