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EDITORIAL
Government Meddling Thwarts Electricity Market Evolution
By Randy Hurst
I've been reading about the increasing globalization of our world's economy and discovered some threads of relevance to the forces that have been trying to reshape the electricity marketplace in Ontario. It's been interesting studying the competing global economic theories and visions of John Maynard Keynes and Freidrich von Haykek and how the competing economic systems of socialism and capitalism were spawned from their relative works in the early part of the last century.
Keynes comprehensively challenged traditional economic theory by arguing that if the private sector was not able or prepared to spend money to boost the economy, then government should, even if it meant running a budget deficit. Keynes' influence led to Roosevelt's New Deal in America and the socialized Britain of the 20th century. By mid-century, nearly one-third of the world's nations were socialist in large measure with governments owning, controlling, and protecting large sectors of economic activity. Canadian governments, federal and provincial, clearly followed this tradition with countless social programs, government-owned monopolies, subsidies, regulations, controls, interference, market manipulation, economic equalization, etc... all in the interest of a 'just society'.
Von Haykek, on the other hand, argued that governments should not intervene in economic issues and that an unregulated market, left alone, would result in a spontaneous form of order. He claimed that although the market is not always perfect, the reason for that doesn't lie within any deficiencies in the market itself, but with government interference. Von Haykek's economic theories were ignored or abandoned by governments rushing to adopt Keynesian economics of high taxation, deficit spending, price and wage controls, industry regulation, government subsidization, etc. That is, until the early 1980s when America and Britain, under Ronald Reagan and Margaret Thatcher, were the first governments to set in motion the effort to deregulate, disinvest, de-control, reduce taxes and government spending. This was all an effort to unleash the economic forces of an open economy where the market, rather than government, would control economic performance.
On a world scale, these are powerful forces. The current globalization of the world economy is being fueled by market forces and not by government control. Economic systems that were founded on Keynesian theories such as socialism and communism bred controlling and ineffective governments like in Britain and Russia. Conversely, nations that have let loose the capitalist hounds are prospering like never before in history.
Canada's socialist economic traditions and government policies have failed our country and its people. We are a nation with a 60 cent US dollar and an approximate $550 billion national debt. We have a socialized medicare system that is in serious trouble, as is our socialized education.
What does all of this have to do with electricity? Plenty. Successive Ontario governments demonstrated their lack of interest in investing in new generation, partly because of the political noose of nuclear power; reluctance to assume more debt; and an ideological shift toward less government control and more market control of the provincial economy. After years of planning and action toward an open electricity market, a market which had been sold as an artificially-priced and controlled product, this Ernie Eves version of the Mike Harris 'common sense revolution' has sabotaged its own economic and energy policies. Why? Simply put, fear: fear of facing angry voters and losing an election. For those who believe that the Ontario government's action was precipitated by concern over increasing electricity bills, you are sound asleep. Self interest ruled the day (once again) at the cost of billions of taxpayer dollars (tax shock and more debt) in socialized equalization rebates and a commitment to spend more money on government (more debt) programs to encourage renewable energy alternatives. Where is the common sense in this?
Ontarians deserve a government that is willing to build electrical generation and transmission capacity (and do it well) or step aside, insisting and making certain that others do the work and not meddle in the building and pricing of a product out of its control. Ontarians deserve to pay a competitive price for electricity, a manufactured product, like any other manufactured product, and if it is too expensive then either cut back or find another product/supplier. In the end, the market will find a balance. After all, a market that needs enabling and protection is an unhealthy market. Because of its economic codependency, the best cure for this unhealthy market is tough love and independence. Ontarians deserve a government that believes in something strongly enough that it is willing to lose an election over that cause, instead of standing for anything in order to win re-election. And politicians who are the worst offenders of this kind of opportunism wonder why they garner so much disrespect.
The other day, I watched Brian Mulroney on television and he was honored for winning the largest majority government in Canadian history. But it wasn't mentioned the Conservatives then suffered the largest defeat in Canadian history for their attempt to untangle the socialist knot that has gripped the true potential of working Canadians for the past 50 years.
Ontario lost 250,000 jobs over NAFTA and there were many losers, initially, but many more winners in the long run. Our economy today is stronger and more diverse because of NAFTA and other free and open market policies. This would have been the same case with electricity reformation in Ontario. What a waste and such a shame it was not given a fair chance to succeed. ET
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