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September 03, 2007

Comments

Jason in Irvine (Northpark)

Gimme a break, Mr. DeVore. We were without power too today. However, the free market does not solve everything. But Republicans who falsely preach "fiscal conservatism" (like Bush's unbalanced budget??) are starving our state's infrastructure. Man up, and learn to use government for greater benefits to all.

Chuck DeVore

Really, Jason. So, why do you think the West won the Cold War and WWII? What part of our system proved superior to fascism, National Socialism (Nazism) and Communism? If you think government-run (or heavily regulated) systems are superior to free market ones, tell me in what spheres and why?

Ironically (or not with your comment) - was reading F.A. Hayek's "The Fatal Conceit," today.

Let me ask you a question, where does the money for government "investment" come from and how might it diminish the capital available for investment in other areas?

Lastly, you wrote "Man up and learn to use government..." Are you kidding me? How is learning to use the power of goverment an honorable thing when government, by its very nature, is using force to take from some and give to others? I doubt you meant by "Man up," being willing to voluntarily serve society as a member of the military as I did for more than 24 years.

All the best,

Chuck DeVore
State Assemblyman, 70th District

Chuck DeVore

A few more thoughts, Jason.

Do you think the collectivized farms of the Soviet Union were more efficient and produced more food and higher quality food at lower prices, or did the farms of America (granted, we have a farm policy and subsidies, but the percentage value of the subsidies compared to the value of the whole is fairly minor)? Food is pretty important, so I suppose you think government should determine its production and distribution as you may think with health care as well.

For today's power outage, do you think a government agency, say, "The California Power Agency" would have restored power to you more quickly and for less wasted resources, or do you think the heavily regulated, but investor-owned utility Southern California Edison would have? Extending the discussion further, do you think a heavily regulated investor-owned utility or a fully competitive system would have restored your power more quickly -- or, may have avoided the outage altogether? (Note: the so-called electrical deregulation of the 1990s was not a true deregulation as it untethered only part of the market and left government controls in place in the rest, resulting in a highly unbalanced system that was doomed to failure.)

All the best,

Chuck DeVore
State Assemblyman, 70th District
www.ChuckDeVore.com

MrWhipple

Chuck,

Glad to see you've come over into the Ron Paul camp. He's the only candidate running on the principles you've espoused.

Go Ron!

Preston L. Bannister

Chuck, do you really think the "free market" can solve all problems?

Use a toolbox analogy. Would you try and use a hammer for all tasks? While that might be entertaining, it would not be effective. Different forms of social organization are like tools - you choose that one to best fit the job at hand. The founders of this country were especially clever in combining different forms, to our great and lasting benefit.

The "free market" approach does not work when it does not fit the problem. Sometimes you need a wrench or a screwdriver, not a hammer. Try to apply "free market" to the wrong problem, and you will not like the result.

Personally, I too have a strong bias towards "free market" solutions - but only if they work, only if they fit the problem at hand.

Distribution of electricity is a natural monopoly. We really do not need a half-dozen competing electric companies running wires to your house - nor would this be economically feasible. At least the distribution part cannot be "free market", and work as effectively.

You noted that "America’s electrical system is more reliable than the other 30 nations I’ve lived in, travelled to, or done business in ...". Our electrical system largely developed as a heavily regulated monopoly. Lacking a government backed monopoly, our electric system might have developed more slowly, and more resemble the other countries you visited. Maybe there are better ways, but by in large our past approach worked pretty well ... at least so far.

The "free" market works very badly when the suppliers can create artificial shortages - as we have saw not too long ago. Sometimes regulation is a better solution (much as we might prefer otherwise).

I am not offering you any simple solutions, and that is exactly point. Do not count on "free market" - or any one notion - for all problems.

Chuck DeVore

Mr. Whipple, I do find much to admire in Cong. Paul’s economic policies – were that all a President had to contend with. His foreign and military policies strike me as naïve and unsafe. Fred Thompson is my man – he espouses a limited role for Federal government.

To: Preston L. Bannister who wrote, “Chuck, do you really think the ‘free market’ can solve all problems?” Compared to a government monopoly, yes.

Allow me to turn your argument on its head by using the same “toolbox analogy.” The free market is the ultimate tool box as you have an infinite number of tools at your disposal.

I reject your contention that a “free market” approach may not be appropriate to every economic problem.

Let me first ask, under your example, who gets to decide whether or not a free market gets to be applied? Politicians with the full weight of government force behind them? In that case, free markets would all but disappear – as they did in the Soviet Union – and, as they contributed to the collapse of the that centrally planned system.

You wrote, “Distribution of electricity is a natural monopoly.” Yet, the same thing was said of telecommunications, which has many of the same physical constraints. Sadly, our Mexican neighbors labor under a government enforced monopoly for telecommunications which has only served to make its owner one of the richest men in the world.

Of course, U.S. socialist lawmakers warned against the deregulation of the airline industry and the fuel industry some 27 years ago and we see the result in a more efficient system today.

Lastly, when you wrote, “Different forms of social organization are like tools - you choose that one to best fit the job at hand. The founders of this country were especially clever in combining different forms, to our great and lasting benefit.” You did not mean different economic forms, did you? If you did, I am unaware of the Founders’ having created any non-free market institutions (excluding, of course, slavery, which already existed in the states).

To summarize, in reading “The Fatal Conceit” the author’s main point is that a committee of really smart people can never replace the decisions of millions of average people acting in what they perceive as their own best interest.

All the best,

Chuck DeVore
State Assemblyman, 70th District
www.ChuckDeVore.com

Say what?

"the deregulation of the airline industry and the fuel industry some 27 years ago and we see the result in a more efficient system today"


Care to explain that? You are telling us that the fuel shortages and price gouging is efficient? That it has not made billionaires of oil company executives at the expense of those who can least afford to use it?

And don't get me started in the airlines...not after spending all day in LAX trying to get to Chicago.....

deregulation has not created efficiency, it has created wealth in a minority at the expense of the majority,

deregulation helped the phone companies to steal money from consumers while fighting over ad space on deregulated TV stations

do you think we would have the lack of wireless towers we have now if the industry had been regulated just as it was when it was forced to put phone lines in rural areas?


Free market economies work only as well as the regulations make them, CEO's have one concern and one concern only -- becoming as rich as possible as quickly as possible as cheaply as possible, and if hurting consumers, the environment, other companies happens -- well that is just too bad -- money is their primary goal, all others can be and often are stomped on, ignored, and abused.

Say what?

From a 2006 study of the deregulated oil indstry:

The study finds that gasoline supplies in the West are so low that prices would likely spike to $4 and above if there is a refinery fire or other disruption during the peak summer driving season. The chief points of the study, "Running on Empty in the West," are:

• Oil companies have used "just-in-time" inventory practices to artificially drive up pump prices in the U.S. and especially in the West. Gasoline prices are sensitive to local inventory, so keeping supplies at levels just above what would trigger shortages on the street results in dramatic price spikes, most of it profit;

• Western regional inventory is too low to prevent severe shortages in the event of a major refinery outage. Mid-May gasoline inventory for the Gulf Coast was an estimated 49 days' supply, up from previous years despite Katrina. The West was at 18 days, down from previous years and not enough to get outside supplies into the West if there is a major refinery fire. Small disruptions could mean $4 gasoline, and major ones could drive prices, especially in California, to $5;

• Increases in the "spot" market price of crude oil accounted for only a maximum of 17 cents per gallon of pump price increases. Even accounting for local tax increases, most of the price increases went to refinery and marketing profit margins for the oil companies;

• Neither the MTBE phase-out nor the substitution of ethanol is a serious part of the increase. Washington State uses only conventional gasoline and Puget Sound contains the largest refining capacity in the West outside California, yet the rise in its pump prices nearly mirrored that in California, which uses an ethanol blend;

Chuck DeVore

Say what, you and I must live on different planets. I am 45 years old. I can vividly recall the long gas lines of the Carter-era. I can also recall gasoline at $1.34 a gallon in 1980/81. In infation adjusted terms, this is higher than today's cost.

As for the airlines, fares are far lower today in inflation adjusted terms than they were before deregulation. The only folks who didn't benefit from deregulation was Greyhound and Amtrak.

As for the unnamed study you cite on gasoline -- if it's such a great and profitable, sure-fire business, why don't you get into it and make some big bucks??? Or, perhaps it's not as easy to do so as you suggest...

All the best,

Chuck DeVore
State Assemblyman, 70th District

Dan Chmielewski

I live in Northwood too; my power was out for 3 hours. We still had friends over for a BBQ; the house was cool as long as we kept the opening and closing of the door to a minimum. It was never uncomfortable.

Dan Chmielewski

I live in Northwood too; my power was out for 3 hours. We still had friends over for a BBQ; the house was cool as long as we kept the opening and closing of the door to a minimum. It was never uncomfortable.

Andy Favor

Chuck,

Per the usual, I agree with almost everything you have to say. However, on one point I have to disagree. Regarding Ron Paul, you say "His foreign and military policies strike me as naïve and unsafe." I would have to say that compared to current Republican leaders Ron Paul is the only person who is not naive. I am tempted to reregister so I could vote for him, but I enjoy running for assembly too much so I will stay as I am.

"In 2003 Paul Wolfowitz testified before Congress that the war would pay for itself, using $15 - $20 billion a year in oil exports, $10 billion from an escrow account run by the UN, and billions more to be confiscated from Saddam’s own personal bank account."

Say what?

http://www.gao.gov/highlights/d06630high.pdf

Over the last few years, facing intense cost pressures from growing low-cost airlines like Southwest, both United and US Airways entered bankruptcy, voided labor contracts, and terminated their pension plans costing the Pension Benefit Guaranty Corporation, the federal government insurer of defined benefit plans, $10 billion and beneficiaries more than $5 billion. In 2005, two other legacy airlines entered bankruptcy leaving their pension plans in doubt. Only two airlines still have active defined benefit pension plans.

Airfares have fallen in real terms over time while service—as measured by industry connectivity and competitiveness—has improved slightly. Overall,
the median fare has declined almost 40 percent since 1980 as measured in 2005 dollars (see fig. below). However, fares in shorter-distance and less traveled markets have not fallen as much as fares in long-distance and heavily trafficked markets. Since 1980, markets have generally become more competitive; with the average number of competitors increasing from 2.2 per market in 1980 to 3.5 in 2005.

So we got cheaper fares to some cities, yet we paid $15 billion to get them .....

Now, I am not for regulation to the point of stifling trade, but I am against freedom of companies to become bloated cash hoarders just to have a free market ....

Give them freedom and they will take it -- and take it all without regard to the consequences to the nation

Say what?

http://www.consumeraffairs.com/news04/2006/05/gas_prices_inventory.html

the unamed gasoline study


and as for the long lines in the 80's ... I was in the oil industry then --- and we robbed the public every day --

Say what?

it is called a balancing act, just as getting the right amount of government to govern yet not over government is difficult so is having a free market not eat itself.

Neither is easy, it takes tremendous will power and guts to do. And it can be tilted out of balance easily, and once out of balance it can destroy all it touches.

So far we have done both,not well, but we have done it. We have not totally destroyed ourselves doing it, just a few million or so souls have had their lives disrupted or destroyed, out of the hundreds of millions we have that is not too bad. But if either gets completely out of balance, be it government or business we will tear down the house we have built down around our heads and have noe to blame but ourselves

Yeah, right

I am just too old and remember the breakup of the AT&T "Monopoly"...you used to pay $10 - $12 bucks a month for a house line (prvate line, not party line - if anyone remembers what that was) a month. Since that "breakup" I now pay about $140.00 for two cell phones that are like leashes. Don't get me wrong, sometimes cell phones are really good, but they really are the new "leash law" -costing a great deal more.

There was a power outage at UC Irvine Friday also. Because everything is so computerized now staff couldn't do anything but file papers in the dark. Many staff left campus and headed for home. Our office hung in there, the lights came back on and we could operate our computers, however the systems didn't re-boot automatically and some of them were not back up until 9 AM this morning. Some people are still having trouble getting into the various systems that operate our little metropolis. Ah, for the days of pencils and paper....

MrWhipple

Chuck:

I do find much to admire in Cong. Paul’s economic policies – were that all a President had to contend with. His foreign and military policies strike me as naïve and unsafe.
Nothing could be as naïve and unsafe as the mess President Bush has gotten us into.

I struggle to understand how you can see government interference and overreaching a bad thing in all areas except foreign and military policies. You rightly question "politicians with the full weight of government force behind them", but that's exactly what the American empire is built on.

Fred Thompson is my man – he espouses a limited role for Federal government.
Except when he's lobbying for special interests, right?

Here's a good analysis of why Thompson is the Pied Piper of the GOP: http://www.observer.com/2007/five-easy-arguments-against-fred-thompson

Didn't we try this before?

Didn't we try de-regulating energy before? It only got us the greatest swindle since Billie Sol Estes.

Chuck. I admire your committment to the concept of the "market", but I would like to know which constituents in your district not only share your enthusiasm for nuclear power, but would also like to know where in your district you want that new shiny nuke plant built so no in the 70 AD will have to worry about power outages.

MrWhipple
Didn't we try de-regulating energy before?
NO. The "deregulation" of the 90s wasn't even close to true deregulation. Only portions of the system were opened to competition.
Preston L. Bannister

Chuck, a free market is a wonderful thing, when possible, and when you can keep cheating to a minimum. The role of the government is to set and enforce the rules by which the game is played.

Which leads us to one of your belief in nuclear power plants as a solution to our energy problems (a belief which I too hold). Nuclear power must be carefully regulated. If done poorly the possible long term harm is great. The economic temptation to "cheat" is far too strong to be left to the short-term motivations of an unregulated free market. Hopefully we can end up with no more regulation than necessary - but nuclear power must be carefully regulated.

Pick the tools to fit the job....

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