Say Anything Blog

Didn’t Gray Davis nearly bring California, ostensibly the most prosperous state in the union, to its knees by installing price-controls on the energy industry?

 The liberals just never learn.  I notice none of the reaident liberals here have picked up on this yet.  I assume they’re all pretending like big-governemt control of private enterprise doesn’t really result in this sort of thing.

The war against illegal plunder has been fought since the beginning of the world. But how is… legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime. Then abolish this law without delay … If such a law is not abolished immediately it will spread, multiply and develop into a system.

Frédéric Bastiat, The Law

Rob’s recently listened-to songs:

Rob: with "Kenny-Boy" Lay gojng to trail, surely you can remember "Death Star"? Let me remind you (and this article is somewhat critical of Davis, lest you be inclined to write it off as "liberal media" 

http://foi.missouri.edu/usenergypolicies/enronvcalif.html

Rob on February 20, 2006 at 8:21 PM :Didn’t Gray Davis nearly bring California, ostensibly the most prosperous state in the union, to its knees by installing price-controls on the energy industry?No. The energy price deregulation signed by governor Pete Wilson did all that.

I don’t think you know what you’re talking about, Ellinas.

The war against illegal plunder has been fought since the beginning of the world. But how is… legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime. Then abolish this law without delay … If such a law is not abolished immediately it will spread, multiply and develop into a system.

Frédéric Bastiat, The Law

Rob’s recently listened-to songs:

ellinas said, The energy price deregulation signed by governor Pete Wilson did all that.

Question: What does "deregulation" mean in California?

Answer: It means more regulations.

The real problem is that public utils are not part of our demand economy.  Because of govt control of every aspect of pub utils, they are really a command economy, and respond differently to market forces than if they were part of a demand system.  The cause and effect relationship between supply and demand in the pub util market becomes clear when you realize the diference.  The usual market forces we take for granted do not work in the pub util market.  We do not know the real price of energy, because it has never been subjected to the free market.  The entire structure of the energy "industry" would be different if it had been under free market forces.  Not as centralized, different supply setup, different pricing mechanism.  Under the command system, customers are actually penalized for conservation, so don’t expect any under the present command structure.

I think that Rob and Likwidshoe are full of shit on this one. Republican governor Pete Wilson signed the energy deregulation act in the liberal state of California. All price controlls were droped in favor of competition amongst the energy providers. And yes the asswipes did compete. The competition though was as to how best screw the customer.

ellinas: Pete Wilson was a disaster, agreed, but what you believe is wrong.  You can’t deregulate just part of the market, you need to free the whole thing.  Your populist stuff is just wrong.  Sorry you are such a victimology hound.  CA was not always a liberal state, just recently.  We built our prosperity by being conservative.  Since the liberals took over, our prosperity has slipped, which is, of course, completely predictable.

I believe that if you look carefully, you’ll see that only the retail half of the equation was deregulated, as has been done with similarly miserable results elsewhere.  With one half deregulated, and the other still under price controls, its no wonder there are shortages, price gouging, and alternatively, times of enormous profits as well.

Few things are as desperately needed in this country as a nationwide mandatory copurse in Econ 201 and 202. 

Bat One: It’s also true that the govt sets the profit margin for the utils, so that conservation actually creates a smaller profit, so the util must raise its rates to make up the shortfall.  I live in a community that enjoyed just that by conserving its water usage.  Our bills went up.  So much for govt regulation.

I could be wrong but I think with regard to energy we here in Texas have something much closer to market driven economy cause we are not part of the national grid and we have several energy companies to choose from.  Most of these energy companies are brokers who set their prices from the deals they make from a variety of energy producers.

Price control on anything is a bad idea. Unless you are a Socialist? I’ve always found it interesting how the people who suggest price control are the very ones who complain the loudest! The evil greedy oil companies! Bla bla bla bla. If they took the time to stop ranting? Maybe they could stop blaming conservatives and take a glimps at the real problem! (Liberal red tape control freaks!)

docdave: You might have a local market, but if local govt is involved in pricing and distribution, it still isn’t all that free.  It’s also true that prices in general are a function of the large market, and this is mostly or almost totally controlled by the govt. 

ZZ: They dislike it when it appears to be companies controlling prices, but it’s OK with them if the govt controls the prices.  You know how that goes. The lefties are helping us by controlling our lives. 

Exactly!… The government is smarter than we are. We are way too stupid to be able to plan for our own retirement. So we have a government controlled retirement. Pay more get less (goodie)! Gov. price controls on the price of gas at the pump is such a brilliant Gov. program. Don’t you love it that our liberal politicians create these programs for us?… AND another thing we can thank them for is how the heck are we suppose to know how to pay our taxes especially when they know how stupid we are? I really need a flat tax to make my life easier! Sorry I am venting!

ZZ: Of course we are on the same side here.  I don’t support a "flat tax", because I think the problem with taxes is the size and scope of govt.  If we had govt expense like it was in the fifties, no one would be complaining about the tax collection system, whatever it might be.

Where is Ken McCraken when I need him??? robert108,… I support a flat tax. It would be great!… WILLisms.com has a post on taxes. I am a BIG fan of willisms.com! That is where I found Rob say anything man.

ellinas is correct that Pete Wilson signed the so-called "deregulation" bill.  Here’s what it did:

1.  It forced private utilities to divest themselves of their generation capacity and buy power on the spot market.  Some argue that these companies wanted this....I have my doubts.  In other words, it regulated vertical integration out of existence in CA power generation and ensured that the supply side would have costs varying with markets.

2.  No provision was made for higher costs to be passed on to consumers.

So in short, you have an inelastic supply curve (except at huge cost) with inelastic demand, guaranteeing a disaster when hydro power runs short.  Which is what happened, of course. 

And, of course, it’s exactly what Hawaii is trying to do here; free markets for supply, but not for demand.  Go figure that their gas prices are higher even than California’s, despite a supply line thousands of miles shorter than CA’s.

ZZ: As an economist, I am quite familiar with the various suggestions for improving the tax collection situation.  Most of them depend on eliminating the IRS for tax savings purposes, and I think that is just a fantasy.  The other theme is fairness, in the sense of making everyone pay the same amount of tax, or an amount that reflects their participation in the economy.  Nice ideas, but they are just wrong.  Taxation represents the cost of govt, which IMO, is just too damn high!  Unless a tax plan involves decreasing the size and scope of govt, it’s just a tax redistribution scheme.  Some benefit, others don’t.  Real fairness is fewer and smaller taxes, IMO.

Mmmmmmmmm… Flat Tax! I love that fantasy! mmmmm!

ZZ: I am right now a commission sales rep, and so a flat tax would screw me because there would be no allowances for operating expenses.  Most of my consumption is for business purposes, not personal ones, so I would be unfairly taxed.  That is just one example.  Without a constitutional amendment limiting the amount of the flat tax(percentage), the greedy govt can simply increase it to feed their spending habit.  You see, it’s not the cure it’s hyped up to be.

Robert108:

It’s also true that the govt sets the profit margin for the utils, so that conservation actually creates a smaller profit, so the util must raise its rates to make up the shortfall. I live in a community that enjoyed just that by conserving its water usage. Our bills went up. So much for govt regulation.

If demand goes down in an unregulated market, but where fixed costs are high, as with utility companies, wouldn’t you expect the cost of the goods to increase?

"If demand goes down in an unregulated market, but where fixed costs are high, as with utility companies, wouldn’t you expect the cost of the goods to increase?"

Nope.  When the supply curve stays the same but the demand curve is reduced, the market clearing price is generally reduced.  If fixed costs are indeed high, the effects are a general inelasticity of supply.  That is, faced with paying for big ‘ol tool X, people will tend to produce even at a low price to pay it off.

Now, when suppliers say "enough is enough" and leave the market, THEN the supply curve can be redefined and prices can rise.  But in general, prices can fall pretty dramatically in capital-intensive industries with a small reduction in demand.  See "farming" and "disk drives" as examples.

Carrick: No. If demand drops with the same supply(short-run), prices go down to facilitate selling the supply.  When supply adjusts downward to meet the demand, prices tend to stabilize at the previous level.  Less product moves, that’s all.  Fixed costs are part of doing business.  If you can’t sell your product at a profit, you move out of the business.  If the demand is still there, then the price will rise.  If the good costs more to produce than it will sell for, there is no market.  The govt subsidized monopoly is the problem in pub utils.  It prevents new entry and innovation.  Govt likes things to be centralized, but utils, if private, might take another form entirely.  We just don’t know, since utils have not historically been in the free market.

Carrick: I can see I wasn’t clear about the "fixed cost" thing.  Since the govt fixes the cost of producing and distributing energy, we don’t know what the real costs might be in a free market.

Robert108,...Is it okay if I have a flat tax and everyone else can have it this way?… Please!

ZZ: Sure! As soon as we get that "middle class tax cut" that Clinton promised us in the ‘92 campaign.  "Targeted tax cuts" are a leftie political scam, btw.  How about substantially lower taxes for everyone, like a 20% maximum rate?

docdave: Yeah, those govt drones would have to get real jobs in the productive sector.  They would be contributing to the economy instead of being a drain on it.  Very bad!(I’m joking).  We could combine that program with shutting down the borders and sending all the illegals back to where they came from.  There would then be plenty of jobs for the excess govt workers.  Neat, huh?

Doc Dave,...Dismantling the current infastructure? Yikes! The lobbiests would be coming out of the walls! Accountants, IRS employees etc… I guess I should quit being so self centered about this and suck it up?

What a crock of right wing nut propaganda!  The sooner the republicans are voted out of their offices the better it will be for all.  You don’t have to agree with my views,,, but I am not ready to accept the republican facisym ideology ever!!!!

RT: I vastly prefer free people making free choices to the Marxist ideology of the lefties.

 I vastly prefer free people making free choices to the Marxist ideology of the lefties.

Unless that "choice" involves using drugs. Then you’re totally on the side of the "Marxists."

Dave,

Republicans are generally weak when it comes to actually practicing liberty.

R.T. said, What a crock of right wing nut propaganda!  The sooner the republicans are voted out of their offices the better it will be for all.  You don’t have to agree with my views,,, but I am not ready to accept the republican facisym ideology ever!!!!

What? Is that supposed to be an argument?

Republicans are generally weak when it comes to actually practicing liberty.

The Democrats won’t get out of my wallet and the Republicans won’t get out of my bedroom. We’re screwed either way, mon frère!

Dave: Try to stick to the truth;  it gives you more credibility than making things up. 

Epi:  Yes, the socialists are so much better at "practicing" liberty.

likwid: It’s a leftie argument;  all feelings and namecalling;  no content. 

robert108,

Wow, the fact that you are slightly less bad than socialists hardly leaves much to praise.

Maybe that will be the new Republican slogan:

Not as bad as socialists!

Epi: Once again, when you feebly attempt to label me, you are wrong!  I am a conservative; and therefore I don’t have a political party.  I hold my nose and vote Republican because the Dems are commies.  Get it?  You’re characterization of Republicans as "slightly less bad" is also wrong.  They are at least an American political party.

And again, this thread is about price controls, a socialist practice.  Nice hijack, again.

robert108,

Boo hoo. 

This thread is about whatever I want it to be about.  Don’t tell me what I can or can’t do!  I’m an individual!   Rant!  Rant!  Stomp!  Stomp.  Huff and puff like Rob! 

Rob,

You’re characterization of Republicans as "slightly less bad" is also wrong. 

And why is it wrong? 

Republicans basically don’t like open criticism of their party, especially by libertarians, because they know how divorced from the principles of small government that they espouse that they are.  We have a very good example of big government conservativism in D.C. these days (just take a gander at the exploding budget and national debt), and when we hold that example up to them they go into denial mode.

After a while one has to ask, how does one tell the difference between a Republican and any other form of statist?  It seems an impossible task in light of where the Republican party is today.  George Will wrote about this same thing last weekend regarding the House’s vote on 527s. 

http://www.washingtonpost.com/wp-dyn/content/article/2006/04/14/AR2006041401450.html

In light of these developments there is simply no reason to vote for Republicans, unless on the rare occassion one happens to live in a district like that of Ron Paul.  A point which can be said about the Democrats as well.

Republicans basically don’t like open criticism of their party, especially by libertarians, because they know how divorced from the principles of small government that they espouse that they are.  We have a very good example of big government conservativism in D.C. these days (just take a gander at the exploding budget and national debt), and when we hold that example up to them they go into denial mode.

Someone obviously doesn’t pay too much attention to what the Republicans at this blog have to say.

likwidshoe,

When I see Democrats prominently slammed here for an iPod tax that is also supported by Republicans (as was the case a few days ago) I find your sort of comment hard to fathom.

When I see Democrats prominently slammed here for an iPod tax that is also supported by Republicans (as was the case a few days ago) I find your sort of comment hard to fathom.

You must miss all of the many posts criticizing big government spending by the Republicans. I guess it would be "hard to fathom" if you don’t pay attention. Which you obviously don’t.

Oh, and you’re picking one post, written by a guest poster, out of more than eight and a half thousand at this blog.

Epi:  Are you sure you’re not Michael, the auto-didact?