“It’s a very regulated market, so I wouldn’t call the current state a ‘free market’ in any pure sense.” ( – Michael Giberson, R Street, October 27, 2023)
The understatement of the year, political economy-wise? I’ll take it, just as I did with Lynne Kiesling’s belated acknowledgement that the “knowledge problem” applied to ISOs/RTOs (yesterday’s post).
Is the Kiesling/Giberson obfuscation of today’s centrally planned wholesale market (and a government monopoly to boot) coming to an end? For more than a year, I have begged both Lynne and Michael on social media to simply define what is a free market in electricity–and compare that to the present governmental system.
“I will not dance to your tune,” Lynne answered once in the heat of battle, reversing her no-response, disengagement strategy. And now Giberson, almost as an aside, has put a trump card on the table.…
“… the knowledge problem and governance problems are intertwined.” (Kiesling, October 20. 2023)
Those eight words from an electricity technocrat dressed in classical liberal garb represent a major concession regarding the (governmental) centrally planned wholesale electricity markets, known as ISOs (Independent System Operators) and RTOs (Regional Transmission Organizations).
Before, Keisling only acknowledged governance. “Where the RTOs should have done better IMO is in governance, which is quite flawed but flawed differently in each RTO…”, to which I responded:
One question you have refused to answer: apply the knowledge problem to ISOs/RTOs. Can you do that for us all at substack? And not only Hayek–bring in Don Lavoie’s analysis on noncomprehensive planning, and the Austrian view of competition.
And now she has answered in part. It is not easy dealing with an assumption-making academic who seems to be hiding something from her classical liberal friends and sponsors.…
In October 1993, I published a pamphlet in Studies in Market-Based Energy Policy (#3) with the above title. On its thirtieth anniversary, I excerpt its major parts. So how does it read today–and compare to other writings of its time that were critical of fossil fuels? I report: you decide.
“From today’s [1993] vantage point, the energy-policy lesson has been half-learned. It is widely known that major command-and-control regulations do not work. The lessons of the 1970s energy crises have not been forgotten, and another energy crisis cannot be expected without price and allocations regulations.”
Executive Summary (pp. 1–2)
This primer on energy choices and market decision making has direct implications for energy policy. If voluntary choices in a free-market setting result in efficient outcomes, many current energy policies based on taxation, subsidies, and regulation can be critically questioned.…