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

Comments inserted below.

>From: Sven R Larson

>To: pkt@xxxxxxxxxxxxxxxx

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

>Date: Thu, 17 Oct 2002 08:59:35 -0400

>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).

[Ryan] This has nothing to do with uncertainty. Electric power is a natural monopoly, an old concept that should be revived by economists. As such, it is most efficient, in terms of the costs of production and stability in supply to end users, when regulated. De-regulation increases costs and jeopardizes stability.

The movement for de-regulation and privatization is a world-wide phenomenon driven by ideological myth and greed.

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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