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.

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.

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.

"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.

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.

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.

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.

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!

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?

Rob on February 20, 2006 at 8:21 PM idn’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.

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.

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?

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

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!

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

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.

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. 

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.

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

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

Maybe that will be the new Republican slogan:

Not as bad as socialists!

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

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.