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.
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.
posted by ohnodoctor at 11:56 AM
1 Comments:
I don't know if power companies are an adequate example of a truly 'free' market... as if we had a truly free market for them, our power poles would contain hundreds of lines running to each provider... which is technically impractical... so that kinda makes them have to share the grid...
Regulation becomes necessary to ensure that the company running the lines doesn't monopolize the consumers... like Cable TV has. I know that wasn't that far from what you said... but thought I'd throw in.
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