A Free-Market Energy Blog

Anti-Public Utility Regulation, Pro Business (political vs. free-market capitalism)

By Jim Clarkson -- August 2, 2016

“You must separate out being pro free enterprise from being pro business. The two greatest enemies of the free enterprise system, in my opinion, have been, on the one hand, my fellow intellectuals, and, on the other hand, the big businessmen.” (Milton Friedman)

“Utility regulation is the unholy union of vested privilege and authoritarian ideology that produces the Rosemary’s baby of flagrant cronyism.” (below)

When an economic libertarian criticizes Georgia Power and Atlanta Gas Light (the utilities in my service area), it doesn’t mean that big corporations or business in general is bad. Quite the contrary, business operating in a free market is morally legitimate and has a sound public policy purpose.

What is opposed is the use of government power to enrich an enterprise instead of winning consumers through superior performance in a competitive market. Time and again we witness the deleterious results of actions by regulated utilities to profit from political influence and government protection.

With Southern Company’s Vogtle Nuclear Plant and Kemper coal-capture-and-storage project–both certified boondoggles that very few would dare want to repeat–the corrosive effects of regulatory protection is clearly evident.

In these projects, the utility knowingly used phony numbers and unrealistic schedules to obtain state and federal agencies’ approval for hugely expensive, high-risk projects with the real and final cost falling on innocent consumers. This would not and could not happen in the real business world where there is no incentive for putting together disastrous projects that squander capital.

For the projects used as examples here the early emphasis was on political connections and how best to game the regulatory system. These projects could not have been done without considerable support from politicians. It’s not just the politicians that are corrupt but the upper management of utilities that develop schemes to exploit the public rather seeking better ways to serve consumers.

Utility regulation is the unholy union of vested privilege and authoritarian ideology that produces the Rosemary’s baby of flagrant cronyism.

“[Politicians] are seldom if ever moved by anything rationally describable as public spirit; there is actually no more public spirit among them than among so many burglars or street-walkers,” H. L. Menken once wrote. “Their purpose, first, last and all the time, is to promote their private advantage, and to that end, and that end alone, they exercise all the vast powers that are in their hands.”

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