What is Radio?

Albert Einstein, when asked to describe radio, replied:

"You see, wire telegraph is a kind of a very, very long cat. You pull his tail in New York and his head is meowing in Los Angeles. Do you understand this? And radio operates exactly the same way: you send signals here, they receive them there. The only difference is that there is no cat."

The "Free" Market - Counter-Retort

In response to The "Free" Market - Retort

In Drew's latest piece of propaganda, he starts off by making a bunch of correct statements about the economy that he implies I don't agree with, finishing it all off by putting words in my mouth:

Mike believes that all the wealth in the world at any given time is conserved. That is, in real dollars, the wealth of the entire universe has been the same from the moment of its conception (if any) until now.

Actually, no, I don't believe this. Dunno where you got that. Sorry.
He then begins questioning the validity of the California Energy Crisis:

Mike basically maintains that Enron created 'artificial' power shortages, etc. etc. But I mean, come on. There's either a power shortage or there isn't one. What is this 'artificial' nonsense?

Well Drew, I'll tell you what all this nonsense was; and by the way, you are correct again: it WAS nonsense. What happened was this:

• Enron buys company that owns most of the power infrastructure in California. All is well.
  
• Enron lobbies for utility deregulation. All is well.
  
• Govenor of California shifts uncomfortably in his chair, not liking the idea. He's overruled. All is well.
  
• Enron succeeds, power is deregulated. Prices immediately spike due to new market factors, and so does Enron's profit margins.

Allow me to explain something here. Enron owns this entire market in many areas; in other words, they have a Monopoly. This means that other conpanies cannot realistically compete, or that the profits or chances of success are so low that it is not worth it. On with the timeline:

• Enron wants more money. Because there is no competition to switch to, they can charge whatever they want, as long as they have a good enough excuse to feed to people.
  
• Enron executives have a brainstorming session
  
• Enron calls several of its power plants and tells them to shut down for a few hours, completely and deliberately blacking out entire regions of California.
  
• Enron tells the world that it is having supply problems, and that there is simply not enough power available. Enron continues selling its California power to New Mexico because this statement is a flat-out lie.
  
• Prices reach an all-time high for the country in the state of California.
  
• California power is re-regulated and supply problems are never heard of again. California goes back to having one of the best-supplied power grids in the world. All is well.
  

Now what does this "regulation" consist of? Well, it says that "this power company must be able to supply X amps for not over X dollars." It's like a maximum-wage for utilities.

And so everyone's best interests are represented. And they're represented 100% right, 100% of the time. And it's 100% fair.

Tell me this: There is one power company. They are charging $370/(mw/h). What do you do? How do you look out for your best interests? Do you expect everyone to go buy a generator? Or do you simply say: "No, power company, you can't charge that much. We let you have a monopoly, so stop exploiting us." Becase they were exploiting us; for the amount of money these companies were making, you could buy some very nice power plants on E-Bay and fix your supply problem. The only real crisis here was that monopolies were being allowed to charge anything they liked for a utility.

The "Free" Market

In response to this.

This post is one of many that is saturated with a complete, unfalliable belief in the sanctity of the Unregulated Free Market. An Unregulated Free Market, in this sense, is a system where everything is free to be bought and sold, and the owner of an item has complete control over what is done with his property.

This type of a system is best suited to an environment in which there are no natural limits to anything upon which the UFM depends (See Internet). In such a market, the costs to entry are either small or nonexistant, and anyone is free to begin selling products that compete with other, existing products. This works.

However, in the real world, there are natural limits. And they aren't trivial ones like limited bandwidth. The main problem is that there aren't enough of the things we want.

But wait! Competition forces us, an an Unregulated Free Market, to use our available resources as efficiently as possible! Ah, what a relief. In the Unregulated Free Market, money results from efficiency, and efficiency is a side-effect of competition. I believe that, typically, the most efficient way is also the Right Way, and is thus the way that will make the most money.

For Enron California, the Right Way was to create artificial power shortages to drive up prices. Enron would call up its power plants and tell them to shut down for short periods of time, or else shut them down completely. This allowed Enron to charge more for less power. And they were Right, too; the power crisis forced people to use what power they had as efficiently as possible.

There was no real shortage of power. Many other power companies had excess power to sell. They just couldn't get on Enron's grid.

In other states, however, regulation forces all of the power companies to use the same grid, thus encouraging competition, even if the grid technically belonged to only one of the companies.

CONCLUSION: Regulation is often required, in modern industries, to preserve competition. The absense of all regulation is as opressive as too much regulation, except that, with no regulation, the opression will come from property owners and corporate entities rather than from the government.

Hello World

I had to create this blog to rebut Drew Crawford's absurdly overt conservative propaganda.