"Forget Keynes, Think Deming" is a good, well-reasoned piece, Jose. However, I believe we still are writing about two different things. Actually quite a few utilities utilize Deming, notably Florida Power & Light Co., which won a Deming Prize back in the 1990s. I actually wrote a book about Deming applications in the health care industry back in the early 1990s. IOUs actually are quite well-managed. The problem is that IOU executives, and leaders of other industries, must manage within an ever more constrictive set of government regulations. They don't control their fate, Washington does, a position of which we've seen ample evidence over the last few months.
I have just been re-reading Will and Ariel Durant’s masterful The Age of Napoleon from their The Story of Civilization series—I’ve read them all before, just going through again. Actually, Karl Marx was a fairly late-comer to the ideas of class warfare and dictatorship of the proletariat. Virtually all these economic systems were tried by the French during the terrible 26 years of that revolution, including socialism/communism, before Marx was born or while he still was in diapers. What finally emerged was a consensus that free enterprise worked better and pulled the country out of economic crisis just in time for Napoleon to benefit from the country’s resurgent economy. For a good review of how economic systems affect a national economy and political freedom, I suggest Durant.
My position is that a return to free enterprise and abandoning “class warfare” is the only hope for avoiding/abbreviating/mitigating a major economic/political collapse that seems to be impending. I agree with letting competition set electric prices—true competition, not the regulated, closely controlled aborted versions of the late 1990s. During that period, not one PUC was abolished and more, rather than fewer, federal regulations were imposed. The free enterprise political/economic system in this country is so distorted now, it’s really hard to know what effect any new “market restructuring” program such as EWPC would have. I just believe government should get almost entirely out of trying to regulate the economy and let it regulate itself according to Adam Smith’s basic principles. No one has yet proven him wrong, yet. Certainly Marx didn’t.
Marxist economic/political doctrine didn’t work in Russia; it didn’t work in China. But it did create untold human suffering. It did extend government control over all aspects of citizens’ lives and inaugurated the greatest killing fields of all history, at least 40-to-60 million in Russia and probably untold, and ever unknown, hundreds of millions in China. Each step we take toward a “controlled” economy and political “redistribution of wealth” is another step in the direction of Russia and China, and even France, and toward dictatorship and terror. Each step we take toward government ownership of assets and inflationary monetary policy is another step toward slavery. Free the economy and with our basic Constitution and fundamental laws—before all the garbage added since 1930—and you free the people!
Please elaborate. Throughout much of the US, we do have pervasive competitive markets on the wholesale side, and vigorous competition in a limited set of retail areas.
In response to your comment on the EWPC article "Think Deming to Enable Much More than Just Freedom ( please hit the link http://www.energyblogs.com/ewpc/index.cfm/2009/1/1... )," I found and posted one message that explains your sentence "I believe we still are writing about two different things." This is in addition of EWPC being a fundamental solution (high systemic leverage) and not an incremental solution. I repeat here my response:
I think I found a large difference between the two of us about Deming, which can explain your feeling "I believe we still are writing about two different things." In fact, Deming himself wrote "Somehow the theory for transformation has been applied mostly on the shop floor. Everyone knows about the statistical control of quality. This is important, but the shop floor is only a small part of the total... The most important application of the principles of statistical control of quality, by which I mean knowledge about common causes and special causes, is in the management of people."
Deming adds: under the heading "Transformation is required in government, industry, education," that "The function of government should be to work with business, not to harrass buiness." BIG DIFFERENCE, which is referred to the System of Profound Knowlege, not simply Deming Managent System. President Obama needs to convert himself and his team to the new system to stop harrasing business. That is The New Economics of Think Deming, to Forget Keynes.
I reiterate, on the wholesale side of the power business, there is no such thing as a monopoly anymore in the United States. Even in the non-ISO regions, there are active, spirited markets. Many states already have implemented retail deregulation in the commercial and industrial sectors, and several have implemented retail deregulation in the residential.
To get the Cato report, just google pa530.pdf
You will see the report is still significant, when you read the EWPC paper "Just as Pogo, IOUs Found the Enemy" in the Internet link http://www.energyblogs.com/ewpc/index.cfm/2009/1/2...
Regards,
José Antonio
The primary impediment to achieving those benefits has been transmission congestion. It remains difficult to move power because of insufficient transmission. As I have stated before, that is mostly a problem of state level foot dragging, not any market inadequacies. Nevertheless, real time pricing within regions has led to considerable efficiency improvements despite the transmission.
They also mentioned that the markets would benefit if consumers were exposed to real time price signals. They already are in several markets. CIEP pricing in New Jersey, for example, is the default. Under that program commercial and industrial users pay the hourly real time price plus some adder for admin. They can sign up with alternative power vendors if they want fixed prices or whatever. Those programs were barely underway in 2004.
While I understand it makes a post much more compelling to read, the world unfortunately can't be painted in black or white. The benefits of deregulation, in the UK energy markets or as we now see in the financial markets, are not always clear for the consumers...
Thank you for your interest. What I am trying to make clear and illuminate here is a fundamental philosophical difference in the function of government. In the original documents establishing the government of the United States--many of them drawing inspiration from European Enlightenment era philosophers--government was to be sharply limited and individuals were "citizens" not "consumers."
The government compacted to defend the nation and provide such limited regulation as necessary to ensure the free and safe flow of commerce. Under this theory of "Liberal Democracy," citizens and businesses were to be free to compete among themselves and prosper to the best of their inherent abilities. There was no guarantee of success and no requirement that citizens be "consumers" to generate an ever-inflating Keynesian economy regulated and controlled by government. The founders of this country were willing to take their chances in a politically and economically "free" nation. Everyone had an equal opportunity to succeed, but no guarantee.
As originally constituted, the U.S. government had no obligation or legal right to "tilt" the system in favor of any individual or group. It is the amendments and modifications since then that trouble me, and many others, so greatly. Government now regulates everything, including personal freedom to what to me and many others is becoming an onerous degree. This is not the proper role of government in a "Liberal Democracy" as defined by the founding fathers.
Best regards,
Warren
Go back and read my responses in "Just as Pogo, IOUs Found the Enemy" (link http://www.energyblogs.com/ewpc/index.cfm/2009/1/2... )
about the incremental extensions of the IOUs paradigm, certainly CATO was right on. With 50 per cent of customers costs there is no doubt that the anti-system was destroyed (think Deming!). The reason: Instituitonal memory was bypassed. Remember to change your opinion about Schweppe. I forgot: Electric power investors will have the whole federal retail market for themselves, after states agree to let go, for their own interest, to generate a hell of a lot of value creation, now that is must needed.