Please Blame the Deregulation and Regulation Fiascos Parte 9

Ferdinand E. Banks has posted another comment:

The consumers and legislators who bought the deregulation scam bought it because they were told that electricity prices would be lower. Like me, the average rate payer doesn't care about consumer sovereignty, pressing buttons, checking dials and pulling levers. They just want lower electricity prices. And Jose, didn't they have some riots in your country over electricity prices: please don't tell me that the riots were about the absence of consumer sovereignty.

In Sweden, and probably elsewhere, dumb academics accepted deregulation because it meant research money and plane tickets. On the other hand, you mentioned Bill Hogan. Hogan is a very very smart man, and IF he wanted retail markets separated from wholesale in the way that you say or think, it's because he figured out what could happen if it wasn't. Not what WOULD happen, but what COULD happen. The Enron bosses were also very smart. They just didn't go far enough into mainstream economic theory to get the entire picture.

This concentration on the so-called drought in California is pitiful. Laughable, actually. In Brazil the government asked people to pray for rain, but as the directors of the main generating companies in that country made it clear, the problem was deregulation, reinforced by a crazy belief on the part of the deregulation booster club that if electricity prices fell, there would still be sufficient physical investment. Whether you know it or not, they had the same nutty idea in California, only worse insofar as the details were concerned.

I told my finance students the following: in finance, history, intermediate economic theory and (fairly) elementary math is the way to go. All of them didn't believe me of course, but they still followed my instructions, because they knew that if they didn't, I would fail them with a smile on my face. We have the same problem here: you've taken simple economics and made it complex, and even worse you've gotten the facts wrong. But cheer up gentlemen: five more years and those sensual Californians will have forgotten all about the meltdown, and then you can foist another deregulation swindle on them.