How the Free Market Rocked the Grid

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?"

Comments

Re:No More Deregulation

[shutdown -p now]

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".

Re:No More Deregulation

[hairyfeet]

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.