Turned up to eleven: Fair and Balanced

Friday, August 15, 2003


One more fair and balanced energy issue
It seems that the running meme in the business community (and the Bush admin.) is that no one has a financial incentive to maintain the power grid, so we need gov't cheese to help out these poor, financially incapable energy companies. Some may be quick to point to this as a "tragedy of the commons" scenario. I find that insane. It is not very smart business to build a billion dollar plant to produce energy, and then have no way to get that energy to market. It is also not very smart to run "last mile" lines into homes, and no supply lines. So, it seems to me, everyone has an interest in this. The problem (and it is, technically, the "tragedy of the commons", but sort of inverted) is that if you shirk your responsibility, your profit margin is bigger, and your competitor's margin (who had to make up for you) is smaller. All of this puts a perverse incentive on shirking.
Needless to say, the answer is not a gov't bailout (the ultimate perverse incentive!) but cooperative effort by energy suppliers and utilities to maintain and upgrade the grid, mandated if necessary by gov't. Of course, this has to be done in a fair and balanced manner.

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