“People who pride themselves on their ‘complexity’ and deride others for being ‘simplistic’ should realize that the truth is often not very complicated. What gets complex is evading the truth. – Thomas Sowell
Imagine a self-described classical liberal that cannot define classical liberalism (a real free market) in their area of specialty. Imagine a self-described “directionalist” who cannot define the end-state. And imagine this person telling me, as her critic, “I will not dance to your tune.”
Political Economy 101 deals with the difference between a free market and governmental intervention. For months, I have begged this person to get to the essence of electricity policy, only to be rebuffed as ignorant and out of step. Meanwhile, this person traffics in hidden assumptions, deep jargon, rhetorical flourishes, and technicalities intended to obscure the fundamental questions. Calling Thomas Sowell (above)
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Welcome to the peculiar universe of Lynne Kiesling, who has wed herself to a government framework of electricity, mandatory open access (MOA), replete with hundreds of sub-regulations and thousands of pages of instruction. Basically, it is de facto socialism of the wholesale power grid such as in Texas, where more than 90 percent of the state grid is centrally directed and planned (via PUC-Texas rules and state legislative instruction).
History of Exchanges
My critical posts on Kiesling are contained in Appendix A below. These began when her cherished regulatory model overseen by the Electric Reliability Council of Texas (ERCOT) blew up in February 2021, an unprecedented mal-coordination that had many government parents and grandparents.
Rather than make a mid-course correction, recommending fundamental deregulation (classical liberal reform), Kiesling has embraced the next phase of electricity statism: the virtual power plant where demand-side pricing models (her specialty)–state-sanctioned and implemented–would control (reduce) demand to supply from a wounded grid of wind and solar. Government subsidized batteries are key in this equation too.
Bobbing and Weaving
The latest concerns her post where she recommends one regulatory path to another. She begins:
Second in my essays critiquing FERC Commissioner Mark Christie’s Energy Law Journal article on wholesale power markets. Here: what does he mean by “true” markets? All markets emerge *and* are designed within an institutional framework, so what’s this distinction between markets and constructs? Read it and get confused.
Bradley: Can we define a ‘true market’ as a free market where government is not involved? And then governmental markets of different kinds? If we have a (government) contrived, synthetic market, can we employ the term “synthetic market failure” or “government market failure” to compare to a real free market? This would seem to be the easiest and most straight-forward way to define the alternatives.
Kiesling: Your definition commits the “no true Scotsman” fallacy. Using the language that I did in my essay, the polycentric institutional stack *always* has government in it. For every market that enables impersonal exchange between strangers. Always. Because markets emerge *and* are designed within an institutional context, and one institutional layer in that (US) context is common law.
Making the good faith assumption that you don’t want to throw out the common law and return to an arbitrary state with rule of man rather than rule of law, then government is always in the institutional stack. Unless you are an anarchist. My inner philosophical anarchist is present, but my person who lives in a pluralist society with others of differing opinions moves from anarchy through minarchy (one way I’d characterize your definition) to classical liberalism. You and I have different conceptions of classical liberalism, with yours being unyielding and monolithic enough that it doesn’t admit mine.
If you refine your language & argument to say that a “true” market is one without the administrative state layer in the institutional stack, I’m open to that. I’m sure that’s not the argument that Christie was making.
Bradley: I am just defining ‘free market’ in electricity in a traditional way. Yes, common law. Yes, ethical norms. And technical joint groups and trade groups…. “Anything that’s peaceful,’ as Leonard Read once put it (the absence of the initiation of force.
Why would you think otherwise? Should I just say ‘limited government’ that does not include public utility regulation of electricity, for starters?
I am just a regular fellow using the regular terms that I have never had a problem with in nearly a half-century of discourse…. until now in a strange parallel universe with electricity. You are intellectualizing and jargoning away to avoid basic discussion of an economics 101 free-markets-versus-government-control. You have an ‘intellectual blackout’ to what classical liberalism is with electricity. Define it in your ‘polycentric institutional stack’, please. Judge Christie by it rather than pretend the free market does not exist. That is what I am trying to get at that I am confident just about everyone else will understand.
PS: I understand the unique characteristics of electricity and have from the beginning of our exchanges.
Kiesling: Your “regular terms” create a false dichotomy in “economics 101 free-markets-versus-government-control”. As with any econ 101 model, it’s a starting point for analysis but not an end state.
Bradley: Can you simply define what ‘classical liberalism’ is applied to electricity? And what is your end-state, your ‘directionalist’ destination?
She then went away (her regular practice). But a comment by Nat Treadway gave me an opening.…
Bradley: Those areas can be within the general definition of the free market (classical liberal markets). Common law against force or fraud. Enforced contracts. This is not about a stateless society (to which I have never been associated with intellectually or otherwise).
This said, I have asked Lynne is simply define classical liberalism in regard to electricity. I will ask here again in its parts to try to get a response. What is classical liberalism? What is electricity? What is classical liberalism in terms of electricity?
I obviously believe that there can be legally defined property rights to electricity and voluntary exchange and the rule of law. This is what emerged from the 1880s for decades until state and then federal regulation became prominent.
Lynne?
Kiesling: I’m too busy to dance to your tune, and my characterization relies on institutional and organizational economics literature that you have either no familiarity with or have rejected as being irrelevant. If you don’t acknowledge that AC wires networks are common pool resources that require some form of collective governance (in my preference a polycentric stack of private, local state, state state, regional state, and federal depending on the specific issue), then you and I have different conceptions.
Bradley: Electricity has long required control areas and did that prior to state and federal regulation. It can be the same today with the simple removal of state and federal intervention. This is classical liberalism in practice–and on-the-shelf to be put into practice.
Of course, government as enforcer of contracts and protector against force or fraud. This is not the issue.
Are you saying that electricity cannot be entrepreneurially run in a free market where private parties via contract (not government coercion) determine control areas and, as needed, form joint organizations for service? Private collective governance, in other words. Not government intervention.
Electricity in the United States beginning with Edison/Insull was a free market, classical liberal discovery process. That progress was interrupted by a series of government interventions.
Classical liberalism applied to electricity is simply the absence of government intervention in markets. What is your definition?
Lynne again disappeared, but Treadway kept the conversation going so I could make my point again to the silent one.
Treadway: Isn’t this semantics? “Private collective governance” is governance, and government is what we, as private individuals, agree to create. “Control areas” without government oversight become feudal states — with princes and paupers. Who determines the decision makers in “private collective governance”? It’s great for private groups — in private places — to govern themselves. In the public sphere, there is a role for public input, and specialized agencies are one means of achieving public input.
Bradley: ‘Private governance’ should not be taken to mean a private sector regulated by a government entity (ERCOT, PUCT, FERC, etc.). ‘Self-regulating’ should not mean regulating by the government. Private contracts are protected under the rule of law. The initiation of force and fraud are illegal to this end.
So clear the semantics there.
In a free market, private firms determine ‘control areas’ with electricity and abide by technical standards as other industries. There is not mandatory open access. There are not prohibitions on joint behavior by antitrust law. There are not franchise rights given to utilities over a certain geographic area.
This is the classical liberalism that Lynne refuses to consider alongside or against her world of mandatory open access. Such is an analytical blackout in the world of political economy.
This explains in more detail classical liberalism applied to electricity. Please read the question-and-answers as well that get into the workings of such a free market. https://www.econlib.org/the-great-texas-blackout-of-2021-is-planning-necessary/
And she went away …. A classical liberal who cannot define or support classical liberal public policy….
APPENDIX A: Posts on Lynne Kiesling
Will Lynne Kiesling Show More Cards? (electricity in crisis, time for debate!) (May 18, 2023)
Electricity Policy: An Exchange with Lynne Kiesling (more evasion, statism from a “classical liberal”) (May 11, 2023)
Are Electricity ISOs/RTOs Government Central Planning? (February 17, 2023)
“Electricity Restructuring: The Texas Story” (revisiting a book gone sour) (August 18, 2022)
Classical Liberalism and Electricity: Ten Questions for Lynne Kiesling (August 17, 2022)
Classical Liberalism and Electricity: An (Unfinished) Exchange with Lynne Kiesling (August 16, 2022)