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.