Re: Paul D. on this year's Nobel--especially V. Smith

[Sven R Larson <slarson@xxxxxxxxxxxx>]

This is exactly the point I was making before. The problem with
deregulation is that it involves the transfer of the burden of
macroeconomic uncertainty from the regulators to the consumers (given
full deregulation). My impression is that the California legislators
had a pretty good idea of the problems that came with this but did not
bother to find a suitable full deregulation solution. Instead they
ended up with a half-half bad mixture of regulation and deregulation.
If you can solve the transfer of macroeconomic uncertainty you can
also deregulate to the full extent. The ONLY reason for maintaining
regulation is that the burden of macroeconomic uncertainty will be
unbearable for consumers. Consumer credit, mortgage, auto lease, home
insurance are all markets where macroeconomic uncertainty is borne by
consumers. Generally - GENERALLY - this works well when paired with
sound fiscal policy. Therefore, generally - GENERALLY - deregulation
of energy markets should work. Besides, New York and New England have
also deregulated, with less problems than California. Experiences from
Europe are not as encouraging.

/srl

Bob McKenzie wrote:
>
> Mr. Liu doesn't have it right.  First of all, the "public" wasn't sold
> anything nor did it "doubt" the claims of lower consumer prices.  It's
> easy enough to check the record - the dereg bill (AB 1966) was
> completely rewritten mostly behind closed doors and then sailed through
> each house on unanimous votes.  No one of significance noticed that
> half, not all, of the "market" was unhooked or noted what that
> would/could mean.  So Vernon Smith's argument - that deregulation
> should be total or complete - is not only valid but admirable in light
> of the many calls to re-regulate based on the false impression (and in
> part the on the deliberately misleading charge by some) that "dereg"
> didn't work.
>
> Bob McKenzie
>
--
Dr. Sven R Larson
Department of Economics
Skidmore College
815, North Broadway
Saratoga Springs, NY 12866
(518) 580-5278