Cruz Bustamante has proposed a cure for the high gas prices in California: regulate it like electricity. Lynne Kiesling says all there is to say about this idea:
Cruz Bustamante’s proposal to regulate gasoline as a utility indicates that he wants consumers to sit in line and wait for gas, like consumers do in Baghdad, instead of being able to buy gas when convenient, albeit at higher prices. In advocating such an ill-advised policy, Bustamante reveals one dimension in which he does not differ from Governor Gray Davis – his complete and utter lack of understanding of how markets give us the best available signals and opportunities about how to use our scarce resources. Davis’s leadership failure in the electricity crisis contributed to his current predicament. Hopefully Cruz Bustamante will see the parallels, retract his populist proposal, and avoid being hoist by the same petard.
If it weren't for California's importance to the global economy, its specific importance to the tech economy, PLUS the fact that I now live in this ridiculous state, I'd almost be in favor of the idea...let Californians clearly see the effect of price controls in a supply-restricted market. Of course, there's always the danger that everyone would blame the big corporations instead of their own failed regulation. It's been known to happen.
...the essence of a great world power is its edge in producing not services but manufactured products that other people want — Boeing's airliners, for example, Intel's semiconductors and Caterpillar's earth-moving equipment. To the extent this output passes to foreign manufacturers, or even to Americans operating abroad, we lose the means to buy what we, in turn, want from others."Say what? First of all, manufactured goods are a declining fraction of the developed world's consumption. Once we've met our material needs, we spend more and more on services. What makes Uchitelle so sure that we won't be able to provide our services in exchange for goods made elsewhere? More fundamentally, I think the 'essence of a great world power', if such a thing truly exists (but at any rate, as it relates to the 'essence' of the US as a world power), is the environment that enables us to continuously innovate and create the most complex products man has ever made - new pharmaceuticals, new computer chips, new software, etc. I am truly at a loss to understand why manufacturing bulldozers is really so vitally important.
Greg Palast knows who's to blame for the power outage last week - George W Bush and the evil power companies. Greg actually investigated some of them back in the day and found that they were cooking their books. Fast forward a few years, he says - the power companies learned their lesson, they backed GWB, and now they're forcing deregulation on an unsuspecting public. In the process - blackout.
Palast's initial story illustrates the main problem - I don't usually care if the companies from which I purchase products are cooking their books; I buy the product if it's high quality and low priced. Any accounting issues are between management and the firm's owners. In a completely deregulated electricity market, I wouldn't have to care about my electricity company's accounting either - if they set their price too high, I would simply purchase from another firm. Shouldn't Palast see that as a plus?
There are lots of problems with the electricity industry right now. The industry is stuck in a weird sort of limbo between natural monopoly regulation and a truly deregulated market. The transmission and distribution system has apparently been one of the casualties. We need to get to a much more decentralized (and deregulated) electricity industry as quickly as possible, both to avoid blackouts as well as to encourage more industry innovation and more efficient consumption. Hopefully the blackout will at least serve as an impetus for change.