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 morboComplete Your Transaction
join:2002-01-22
00000 | reply to major marco
Re: Will the data show regulation the way to go? said by major marco  I mean, look how beneficial electricity deregulation has been for the State of California. Utils are practically free.
[/BQUOTE :add Texas to that list. since deregulation, 20-30% increases. unbelievable. | | |
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 LegoPower77AbecedarianPremium
join:2002-08-03
Midlothian, VA | said by morbo:add Texas to that list. since deregulation, 20-30% increases. unbelievable. Dictionary.com defines "post hoc ergo propter hoc":
n : the logical fallacy of believing that temporal succession implies a causal relation
That is, literally, "after that therefore because of that."
Just because prices went up after deregulation doesn't mean the deregulation did it; it could have been the fact that NYMEX electricity (symbol JM) spiked first to 120 ¢/Mwh (Aug 05 and Dec 05) and then to above 140 ¢/Mwh (July 06). The average being between 60 ¢/Mwh and 80 ¢/Mwh.
Even with regulation, you can't have such an enormous price increase to an input and not have to raise rates.
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"It is a melancholy reflection that liberty should be equally exposed to danger whether the government have too much or too little power."—James Madison
It's right, it's free. | |
morboComplete Your Transaction
join:2002-01-22
00000
1 edit | if you want to get picky, then yes, deregulation didn't cause the price jump (it created an incentive to providers and the stock market players to manipulate prices as desired, under the guise of gaining free market efficiencies). however, it enabled the price jump. areas in texas that haven't deregulated (are still regulated) have not experienced that jump in prices. it's the same result for consumers: 20-30% more cost for the same electricity as before.
in the case of electricity, regulation has prevented all out gouging of consumers. no regulation = gouging. | |
LegoPower77AbecedarianPremium
join:2002-08-03
Midlothian, VA | said by morbo:(it created an incentive to providers and the stock market players to manipulate prices as desired, under the guise of gaining free market efficiencies). If you want to believe in conspiracies and such, fine. I can tell you, as a person who follows markets, prices oscillate back and forth for one reason or another. There's nothing we can do to stop the ebb and flow of things because as long as there are differences, conditions will always change.
The commodity markets actually reduce drastic price shocks because eeevil speculators are willing to take the risk of holding their wealth in a volatile good allowing the producer to have a stable business plan.
Regulation is not the panacea that will prevent people from having to confront costs (i.e., unlimited wants/limited resources). There's nothing about free markets that guarantees Always Low Prices. Always.© I don't know what the politicians out there said about deregulation; deregulation and free markets aren't the same thing. (Indeed, one cardinal requirement of free markets is contract enforcement, which naturally would require legal rules, i.e., regulation.)
All a common theme of my posts over the years is that we would, in most cases, have a superior outcome if we allowed the discovery process that entrepreneurs use to gain advantage be allowed to run it's natural course regardless of the structure of the market (even where there is a highly-concentrated [so-called monopoly] market). Government/regulatory oversight, while necessary to some extent, in one way or another erects a barrier to entry. We musn't be Utopians on one side or the other.
In your regulated areas, someone had to pay the price; do they pay higher taxes? go with fewer services? or possibly could they be free-riding on the nonregulated areas? (I don't know, and I'm not saying I do.) I do know the cliché, "there's no free lunch."
Cost implies choice, so be proud to be pro choice. 
(Read how price gouging can be seen as good.)
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"It is a melancholy reflection that liberty should be equally exposed to danger whether the government have too much or too little power."—James Madison
It's right, it's free. | |
| There's nothing about free markets that guarantees Always Low Prices.
There is according to theory. Well, no, not low prices, but c.o.p plus the smallest fraction of one cent (if competition truly exists).
Utilities are very odd and particular markets though, not exactly prithee to typical market rules.
reply to morbo
said by morbo :
(it created an incentive to providers and the stock market players to manipulate prices as desired, under the guise of gaining free market efficiencies).
If you want to believe in conspiracies and such, fine. I can tell you, as a person who follows markets, prices oscillate back and forth for one reason or another. There's nothing we can do to stop the ebb and flow of things because as long as there are differences, conditions will always change.
The commodity markets actually reduce drastic price shocks because eeevil speculators are willing to take the risk of holding their wealth in a volatile good allowing the producer to have a stable business plan.
Regulation is not the panacea that will prevent people from having to confront costs (i.e., unlimited wants/limited resources). There's nothing about free markets that guarantees Always Low Prices. Always.© I don't know what the politicians out there said about deregulation; deregulation and free markets aren't the same thing. (Indeed, one cardinal requirement of free markets is contract enforcement, which naturally would require legal rules, i.e., regulation.)
All a common theme of my posts over the years is that we would, in most cases, have a superior outcome if we allowed the discovery process that entrepreneurs use to gain advantage be allowed to run it's natural course regardless of the structure of the market (even where there is a highly-concentrated [so-called monopoly] market). Government/regulatory oversight, while necessary to some extent, in one way or another erects a barrier to entry. We musn't be Utopians on one side or the other.
Agreed ... relatively. My years covering the utility industry have taught that the regional relative monopolies do indeed make alternative entries difficult. Because of the nature of grid, "alternative technologies" are often not alternative delivery systems, which would provide true competition.
Broadband is not a strict utility though, as there is indeed more than one delivery method and it is not a necessary "commodity" yet.
In your regulated areas, someone had to pay the price; do they pay higher taxes? go with fewer services? or possibly could they be free-riding on the nonregulated areas? (I don't know, and I'm not saying I do.) I do know the cliché, "there's no free lunch."
Most areas are regulated in some capacity (as they have to be with a grid that involves both public and private ownership/services). Municipal customers generally pay slightly less, but that's because municipal utilities have far smaller areas to concentrate resources on (and aren't trying to profit), but conversely, private companies have more power to use their money to make money and invest in the grid.
Broadband is a relatively similar situation, but younger and with more opportunity for competition (particularly in service provision) with the right hand (see my above post for my opinion on the matter), not too heavy, but not too light and very careful to engage local governments, as opposed to the less efficient federal government (federal government having exclusive and final regulatory jurisdiction over things that are best left localized has caused problems in nearly every industry it has happened in). | |
morboComplete Your Transaction
join:2002-01-22
00000 | reply to LegoPower77
said by LegoPower77:If you want to believe in conspiracies and such, fine. did you forget about the price manipulation in the California electricity market or are you just ignoring it?
there is evidence that this stuff has happened, so to just blame it on "conspiracies" is just sticking your head in the sand. | |
LegoPower77AbecedarianPremium
join:2002-08-03
Midlothian, VA | No, I fault the artificial market structure created by the politicians out in lotusland, though. Arbitrage is not evil. It's always the law of unintended consequences and the regulators failed because they're not all-knowing and set up incentive for eeevil businessmen to make a profit.
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"It is a melancholy reflection that liberty should be equally exposed to danger whether the government have too much or too little power."—James Madison
It's right, it's free. | |
LegoPower77AbecedarianPremium
join:2002-08-03
Midlothian, VA | reply to broadbander
When I say free market, I don't mean a perfectly competitive one. Degrees of market concentration are unimportant, in some cases a highly-competitive market works best and in others, they don't. The processor market is super-concentrated, but it's damn cut throat, too.
A company that makes monopoly rent can and does offer a benefit because they have the resources for research and development. Standard Oil in 1870 sold refined oil at $26.4/bbl and had 4% market share. By 1911, they had brought the price down to $4.7/bbl and had 69% market share. Same scenario for Alcoa, in 1887 a pound of aluminum sold for $5-8, by 1941 it was down to 15¢/lb.
This is why the Hayek quote, "Enthusiasm for perfect competition in theory and the support of monopoly in practice are indeed surprisingly often found to live together."
said by broadbander:Utilities are very odd and particular markets though, not exactly prithee to typical market rules. Fair enough. That Regulatory Reform article in my other post shows the "rightist" side of the public utilities conundrum.
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"It is a melancholy reflection that liberty should be equally exposed to danger whether the government have too much or too little power."—James Madison
It's right, it's free. | |
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