Deregulation: California & Pennsylvania

[StephNW4Clark]

Given the debate concerning de-regulation, I would like to offer the following as-objective-as-I-can-be analysis.

I thought I would briefly summarize these points because it's often very easy for people to catch the buzz words and miss the nuances.

An often cited example decrying deregulation is the energy crisis in California. But is this a completely 100% fair assessment?

I'd say no. Not because there isn't ample evidence of consumer fraud and violations of public trust. The charge of deregulation doesn't really account for everything that happened.

California's energy crisis occurred during a period of deregulation, but was caused by the MISAPPLICATION of deregulation. Just with anything else, there is a RIGHT way and a WRONG way to approach an objective.

What failed in California were price controls on retail electric rates and an overly restricted wholesale market. Californians reduced the price rate by 10% and then froze those prices for 6 years. What occurred then was the DISINCENTIVE to conserve energy. Also, potential new suppliers were not attracted to investment in California because of those price restrictions which led to lack of competition in the energy markets.

One of the most serious mistakes made during the California years of deregulation was the decision to NOT allow utilities to enter long-term contracts. Why was this a mistake? Because it subjected the public to the price spikes that occurred seasonally. Instead of having stabilized prices, the public suffered because public utilities couldn't hedge against price spikes in the spot market.

Because of all these factors, CA residents ended up paying 8x as much. The misapplication of deregulation allowed for a ballooning energy crisis that gave Enron traders an opportunity to milk the desperate CA government for all they were worth and then some.

So it's not deregulation - it's the misapplication of deregulation.

In contrast you can look at Pennsylvania's deregulation of the energy industry. Maybe it's not perfect, but it's fairly successful.

The PA program has attracted over 100 power suppliers, including green power. 36,000 jobs have been created in PA, consumers saved an estimated $3 billion over the past 3 years, and capacity is on pace to increase by over 50%.

My point with all this is - deregulation in and of itself is not a bad thing, if it is done properly and planned for to secure the greatest good for the public. Deregulation is essentially a move towards free markets where consumers have the ultimate say by leveraging their power of demand. Consumers are not only motivated by price but also by good will - just look at the proper outrage against NIKE for its unethical treatment of workers. Consumers punished it and drew attention and continue to do so with other companies that follow similar tactics.

I think that is Clark's point.

[WhoCountsTheVotes]

1. Yes, that's exactly what the Republicans say

I thought Clark was a Democrat?

"What failed in California were price controls on retail electric rates and an overly restricted wholesale market. Californians reduced the price rate by 10% and then froze those prices for 6 years. What occurred then was the DISINCENTIVE to conserve energy. Also, potential new suppliers were not attracted to investment in California because of those price restrictions which led to lack of competition in the energy markets."

Yes, that's exactly what Rush Limbaugh explained on his show. But he's wrong.

Aren't you forgetting the actions of corporate executives and government officials? You make it sound like it was an act of God - it wasn't. The facts in California are clear - the utilities and corporations came up with a deregulation scheme, and paid politicians to vote for it.

The power providers gamed the "market" to jack up the rates illegally, but the public wouldn't accept a rate increase - so the utilities lost and the taxpayers had to take rate increases anyway.

Who gets to make the decisions? Corporate executives and the politicians they lobby? A lot of us have been paying close attention to "deregulation" for 20 years, and I for one am not buying the snake oil. Hopefully Clark doesn't really support all this.

[Rowdyboy]

2. So that , by your logic, makes Clinton a republican, right...

After all, he strongly supported PROPER deregulation. Damn those miserable Clinton years, the burden of jobs and a balanced budget. Damn that republican Clinton.

[Pastiche423]

3. Do you support

de-regulation for the:

Energy industry
Media industry
Healthcare industry
Food industry
Trade industry
Minimum wage

Any of the above?

[SahaleArm]

4. Explain what regulation means?

And I could try to answer the question. Is it price control, consolidation, partial government control, or full government control?

[WhoCountsTheVotes]

8. I will, explain what you mean

"price control" - well under a monopoly, the corporations controls the price, so I'd say I'm against price controls by corporations. If our representatives can prevent that, good.

"consolidation" - mergers and acquisitions? Our elected officials should prevent mergers and acquisitions if it could harm workers and consumers.

"government control" - who should control multinational corporations? When you say "government" do you mean America, our democratic republic, should control corporations? Yes, absolutely.

[SahaleArm]

16. Back to the topic on hand.

Government control means run by the government, as in employees of the state. Price control would mean companies sell utilities with certain deviation limits to cost increases, rates are controlled by the state similar to insurance. Consolidation means that we go back to Ma-Bell with price control (the old days). For example Seattle City Light is my electric provider, a state run operation. Puget Sound Energy provides for natural gas and is a publicly traded company. Do we encourage real deregulation, multiple players in the same market with no allowance for consolidation, or do we go back to the old days of one player per market?

[Rowdyboy]

5. Ye Gods, I don't know

You ask me a series of questions that defy simple answers. I haven't even started dinner yet! To be absolutely frank, I was never particularly enamored of energy deregulation to begin with, but the point of the original post (Stephen4clark) was that deregulation of the energy industry, handled properly can work well. That's not what was wrong with California. Nor was deregulation the cause of the double busts of Enron and Worldcom-that was fraud, pure and simple.

I assume by "deregulation" of minimum wage, you mean the abolition of minimum wage. If so, no, of course I don't support that. On trade, we certainly need more regulation than we have on Nafta.

Media, health care and food-I'm just gonna have to get back to you on. And you did make me start to rethink my knee-jerk response so you did good.

However, I lived through the highly regulated decade of the 1970's and the economy sucked-for everyone. I just need to take the time to think it out properly.

I like to discuss things seriously and try to keep an open mind. But then some of you guys start the shitty name-calling ("Clark is a Republican"). It makes me unwilling to listen to anything else that is said, and it leaves my liking the other candidates less. I don't indulge in that shit against Dean, Kucinich or Kerry. Neither does my candidate. It would be nice if we could follow his lead.

[camero]

20. In the 70's

The economy sucked for everyone because of OPEC. There were 3 fuel crisis in the 70's that raised inflation for everything. We had regulation for about 30 years prior with no apparent problems.

[WhoCountsTheVotes]

9. explain what deregulation means?

Energy industry - deregulation means that power companies can withhold power at peak times, jack up the price, and then force consumers to pay for it. No, I don't support that.

Media industry - you mean regulating the public, and not allowing us to broadcast community stations, but letting corporations like ClearChannel buy as much of our "public airwaves" as they want? No, I don't support that. Deregulating as in letting FOX buy all the tv stations in a city? No, I don't support that either.

Healthcare industry - Deregulate HMOs and let the HMOs regulate doctors? No thanks.

Food industry - Deregulating the food industry, what end meat inspections? God no, we should triple or quadruple meat inspections.

Trade industry - ?

Minimum wage - Maybe we should deregulate minimum wages, and worker safety laws. That way all those jobs US corporations are sending to communist China can come back here, and we'll create millions of new jobs at 50 cents an hour.

Any of the above? - I guess not. Hopefully Clark was just taken out of context, and soon he'll give a speech demanding that corporations be heavily regulated for the public good, in the American tradition going back to FDR, Roosevelt, Lincoln, and Jefferson.

[Pastiche423]

15. I'm not sure why you responded to my post

but I like your definitions.

[StephNW4Clark]

6. Wait a second...don't start misinterpreting the analysis

Do I think politicians were blameless? No. But I also said that the failure in CA is too tangled and human error and greed are not failures of the principles of deregulation. What it proves is that deregulation - when misapplied and not planned for with safeguards for the public - created the CA crisis.

[slinkerwink]

14. it sounds like Clark does support it though

I expect Dean to confront Clark on this issue in the next debate.

[CWebster]

7. That is the third time you posted that

It is not a libertarian web site and it is not going to sell. How you can simply gloss over the countless de-regulation disasters from the savings and loans, to energy and the environment, to the media and the loss of responsible and honest reporting, to health care--to Wall Street, to the threat of privatization and deregulation of social security, to our business ethics, to the insurance industry, pharmaceuticals, to our elections... everything benefits corporate interests and the politicians who do their bidding. It is the fundamental crisis in our economy and threatens to widen the gulf between class strata. It is the thread of all inequity that runs through our culture that found momentum under Reagan.

Clark exposed his true colors. It was only a matter of time.

[Renew Deal]

10. "It is not a libertarian web site"

lol

[BootinUp]

11. Lets look at what Clark is saying...straight from the campaign

If you actually read it you'll see it is a position statement that can still win the general election.
The Dean plan for re-regulation is going to be very tough to get past the repugs. Clark has said here and in other speeches learn from the past, stimulate the economy, support unions, etc. I don't see him proposing any specific new de-regulations here.

::
In today's Washington Post, Governor Howard Dean said he plans to make a major departure from the proven economic strategy that our party adopted in the 1990s under Bill Clinton, the same economic strategy that brought us more than 22 million new jobs and the strongest economy in American history.

This is an area where the differences between the choices Howard Dean and Wes Clark would make for the country are clear.

The Clinton economic approach was to create jobs, wealth and growth by bringing labor and business together - not pitting them against each other. That's the only way to create real, long-term growth for both business and workers. And the results spoke for themselves: 22 million new jobs. 1970s-style regulation is not going to get our economy going again. It failed in the past. And it will fail again.

Clark agrees that we need to dramatically ramp up our efforts to hold corporate America responsible for their misconduct. He agrees that we need to limit media ownership. He agrees that we need far stronger protections for workers, consumers and our environment - going beyond where the Clinton administration went in several respects, as times and circumstances have changed, too.

Clark's jobs plan is based on the core Clinton formula of creating jobs by investing in urgent needs and investing in our people, especially in the hard-hit manufacturing sector.

Clark proposed a $2.35 trillion Savings for America's Future plan to restore our fiscal discipline. He supports unleashing high growth job-creation sectors like high technology and why he supports a strong science and technology program.

Clark will make unprecedented investments in our human capital: in health care, in education, in job training. He will promote smart, fair, market-based incentives regulatory reforms, rather than red tape, and volumes of outdated regulations.
::

[Hell Hath No Fury]

12. Would someone please...

expand on this sentence?

"He will promote smart, fair, market-based incentives regulatory reforms, rather than red tape, and volumes of outdated regulations."

I am not comfortable when I hear "market-based incentives" and "regulatory reforms" in the same breath.

[CWebster]

18. He will, perhaps ask them to volunteer

and trust that they will be fair.

:eyes:

[SahaleArm]

19. The problem today is that laws refused to get enforced.

The financial regulatory arm of the SEC is a joke, Bush and Ashcroft are too busy trying to spy on all of America. Dean mention stock options, what does that mean? It means options will be expensed as was suggested by the FASB, giving investors more transparency (real diluted value). Democrats in California and Mass will fight option expensing tooth and nail. Get Spitzer to head up the SEC and watch corporate corruption come to an end.

[WhoCountsTheVotes]

13. "investments" "market based incentives and regulatory reforms"

This sounds more like Newt Gingrich.

[SahaleArm]

21. Regulatory Reform.

Well since no candidate has provided a real answer, we're all just assuming based on rhetoric. As you pointed out in another thread Glass-Steagall should be brought back, combine that with full accounting transparency, including option diluted valuation. Have laws that require boards to be separate from executives and bring back fudiciary responsibility to the shareholder. Actually have an AG and SEC that are willing to enforce these laws and Sarbanes-Oxley. All of those could be part of regulatory reform.

[Ksec]

17. Dereg is good if you can trust people to be honest

And when money is in the picture honesty usually takes a backseat.

The question is whether people are basically good. Basically yes. Lots of people together with profit thrown in makes them pretend that honesty isnt always the best way, in business to make money. Sometimes you have to dance around the rules a little to make more profit.

So when we realize people cant be trusted then we need watchdogs.

[IronLionZion]

22. It all boils down to honesty

If everyone was honest this wouldn't be an issue. Some people are greedy and we need to regulate those companies.

PS: I like the windmills near my house in Western PA, they're so spiffy and good for the environment. I think.