Tuesday, September 13, 2011

10% off your energy bill? - 22 days until election

Thanks to the Liberals I received a flyer telling me they are taking 10% off my energy bill!  Magical!  Why 10% and not 20% or 50%?  Why not add 20%.  The truth is they have no idea which choice would be best because government has prohibited a free market for energy and thus the price is always wrong.

The reality is that only a free market, where millions of individuals set their own priorities in life and spend their wealth accordingly can establish the right price.  Every other situation distorts reality by forcing an artificial price upon everyone. 

Just for fun, consider the following historical steps:
1. Individual (private) scientists discover electricity.

2. Private industrialists invest and risk their wealth to discover ways to produce electricity.  Fierce competition drives steady improvements in efficiency and economy of production.

3. Private industrialists invest and risk their wealth to discover ways to distribute electricity and again, competition inexorably drives down the price and raises productivity.

4. The productivity of all citizens is improved as electricity makes their work more efficient and their lives safer and more enjoyable.

5. Individual consumers freely choose in ever growing numbers to buy electricity from its producers and distributors.

6. Electrical production and distribution becomes central to all aspects of the economy, vastly increasing the quality of life for all.  Anyone is free to produce it and anyone can compete for distribution.

7. Government siezes control of the industry and creates a monopoly, claiming it is in the public interest and that private companies will overcharge the public. 

8. The industry becomes locked in a virtual stasis, with innovation only occurring slowly and due to ideas created outside the government.  Since no individuals own the company or its assets, there is no incentive to innovate, create efficiency, or any need to compete, since competition is forbidden.  Assets deteriorate.

9. The company is directed to do inefficient and even stupid things by politicians who think they know better than individual citizens how to produce and distribute electricity.  Very inefficient and undesirable giant windmills are constructed against the wishes of nearby residents, consumers and municipal governments.  Hugely inefficient solar installations are built that suck wealth from the population.

10. Prices are subject to the whims of politicians who know nothing of business or free market economics.  Punishments and rewards are meted out seemingly at random, but are in fact used to buy political favour and votes.  A 10% price cut is accomplished by borrowing money.

11. When problems become too much to bear, the cry is for someone to "do something" and millions or billions are wasted on inefficient changes done at the point of a gun. 

12. The standard of living of all individuals is reduced because of the lack of competition and artificially high prices, creating system-wide inefficiencies.

13. Because the whole electrical system is a monopoly, poor decisions have enormously harmful and widespread effects.  In an industry with many businesses competing, one or several can do poorly and their market share is inevitably picked up by their more efficient competitors.  In a monopoly everything fails at once and there is no backup.

14. Politicians lacking even a fundamental understanding of free market economics claim that they know better than other politicians how to run an enormous, impossibly complex industry.  They engage in a war for votes, each promising to do better by spending taxpayers money instead of allowing individuals to each spend their own money.

15. The electrical monopoly and the government enter a spending and debt spiral that can only be relieved by restoring the freedom of individual scientists to experiment and discover, of individual industrialists to produce and individual consumers to choose their purchases.

What is required is a free market and the protection of individual rights.  This will certainly not happen under the Liberals, PC's, NDP or Green Party.  Only the Freedom Party of Ontario promises to start the move in the right direction.

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