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Electricity Deregulation: Not Such a Bright Idea
The blackout that left 50 million people in the dark should be wakeup call for Congress and the White House, which has been pushing a deregulation scheme that creates big profits for power traders but strains a transmission system designed for use by local utilities to serve their local customers. Rather than seeing the light, Congress appears ready to promote further deregulation. To add insult to injury, pending energy legislation repeals the Public Utility Holding Company Act, which protects investors and consumers from Enron-style utility meltdowns caused by utility executives who want to use ratepayer profits to invest in far-flung, risky business ventures that do nothing to keep rates low or prevent blackouts.

Lawmakers should be examining how deregulation has undercut the reliability and affordability of the country's electricity markets. They should be investigating corporate mismanagement behind the recent blackout and promoting local control of utilities

reform the cleptocrats :D
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By Paul Krugman
New York Times | Opinion
Tuesday 02 September 2003

When the E.P.A. makes our air dirtier, or the Interior Department opens a wilderness to mining companies, or the Labor Department strips workers of some more rights, the announcement always comes late on Friday — when the news is most likely to be ignored on TV and nearly ignored by major newspapers.

Last Friday the Federal Energy Regulatory Commission, known as FERC, announced settlements with energy companies accused of manipulating markets during the California energy crisis. Why on Friday? Because the settlements were a joke: the companies got away with only token payments. It was yet another demonstration of how electricity deregulation has gone wrong.

Most independent experts now believe that during 2000-2001, price manipulation by energy companies, mainly taking the form of "economic withholding" — keeping capacity offline to drive up prices — added billions of dollars to California's electricity bills. A March FERC report concluded that there had been extensive manipulation of prices in both the natural gas and electricity markets.

Using methods widely accepted among economists, the California Independent System Operator — which operates the power grid — estimated that withholding by electricity companies had cost the state $8.9 billion. This estimate doesn't include the continuing cost of long-term contracts the state signed, at inflated prices, to keep the lights on during the crisis.

Yet the charges energy companies agreed to added up to only a bit more than $1 million. That is, the average Californian was bilked of more than $250, but the state will receive compensation of about 3 cents.

Was the fix in? Given the Bush administration's record of catering to energy companies, FERC isn't entitled to any presumption of innocence. Still, the main problem seems to be with the commission's approach: even in the aftermath of large-scale price manipulation, it demands givebacks of excess profits only when it can prove that those profits arose from a specific prohibited action.

This leads to very low settlements, for two reasons. First, while an industrywide pattern is easy to identify, intentional withholding by an individual producer is much harder to prove. Though investigators have found a few smoking guns — control room tapes, e-mail, memos — a power shutdown designed to increase prices is usually indistinguishable from a shutdown for genuine technical reasons.

Second, since withholding drove up prices across the board, each company profited from other companies' price manipulation. So even if FERC forced each company to give back the profits from its own bad behavior, it would leave most of the industry's excess profits untouched.

State officials wanted refunds based on estimates of the overall overcharging that resulted from price manipulation. But my expert contacts tell me that the antiquated language in the Federal Power Act, the basis of FERC's authority, probably doesn't give it the power to enforce such refunds.

On the other hand, FERC clearly does have the power to abrogate long-term contracts signed during the crisis. Indeed, the commission's March report contained a strong hint: "Staff recommends using the analysis in the report to inform ongoing long-term contract proceedings and other complaints that long-term contracts are not J & R [just and reasonable]." But in June, on a 2-to-1 vote (yes, two Republicans against one Democrat), the commission upheld those contracts. So California, the victim of one of the worst abuses of market power since the robber baron era, will get no redress.

So what does this say about electricity deregulation?

There is a theoretical case for a deregulated electricity market. But making such a market work, it's now clear, requires at least three preconditions. First, it requires a robust transmission system, yet the recent blackout made it clear that we have now created a system in which nobody has clear responsibility for the transmission network. Second, it needs a watchdog agency with adequate powers to prevent and punish price manipulation; FERC doesn't have those powers. Third, that watchdog must not be an agent of the very companies it's supposed to be policing. Enough said.

I admire the virtues of free markets as much as anyone. But given what we've seen so far, any state government that lets the federal government prod it into deregulation is just plain crazy.

it's all thievery I tell you!

exposing the piggery
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I do not wish to argue blindly
but debate the issues before us!

kleptocrat nation (klep´te krat´ na´shen) n. 1. A body of people ruled by thieves. 2. A government characterized by the practice of transferring money and power from the many to the few. 3. A ruling class of moneyed elites that usurps liberty, justice, sovereignty, and other democratic rights from the people. 4. The USA in 2003.

the kleptocrats have taken over. Look at America’s leadership today—not just political but corporate, too. Tell me you wouldn’t trade the whole mess of them for one good kindergarten teacher. When I look at any one of them, I can’t help mumbling to myself: 100,000 sperm and you were the fastest?

Yet, they’re in charge! We live in the wealthiest country in history—a country of boundless possibilities, a country made up of people deeply committed to democratic ideals, a country with the potential for spectacular human achievement—but we find ourselves ruled (politically, economically, culturally, and ethically) by a confederacy of kleptocrats.

A couple of years ago, Japanese police discovered more than 400 pieces of women’s underwear in the home of Sadao Ushimura, a fellow who was a prominent official in Japan’s finance ministry at the time. Mr. Ushimura proclaimed total innocence of any possible scandal or perversion, explaining: “I picked up all lingerie on the streets by pure chance.”

We still have our underwear in America, but we’ve been stripped of a garment far more delicate and precious: our democracy. The essence of democracy—our power to control decisions that affect us—has steadily and quietly been pilfered by corporate kleptocrats. They have collected up our democratic powers piece by piece, hoarding them in the privacy of their own fiefdoms. These corporate elites (fully abetted by the governmental elites they have bought) now effectively control the decisions that affect We the People—everything from public-spending priorities to environmental degradation, wages to war, what’s on the “news” to who gets elected.

This would be terribly depressing, except for one thing, which is that one basic has definitely NOT changed in our land: The people (you rascals!) still have that instinctive and tenacious belief in our historic democratic principles. The antidote to kleptocracy is the age-old medicine of democratic struggle, agitation, and organization—and all across our country, the rebellion is on!

Written By Jim Hightower
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From the Editor: Guns, germs, steel, and those kleptocrats

LP News Editor
One of the most interesting books I've read recently was Guns, Germs, and Steel, by Jared Diamond. It's not a political book; in fact, I could detect few ideological biases by the author. Instead, it is an examination -- spanning thousands of years -- of why some cultures thrive and others don't.

Diamond approaches the question from a scientist's perspective. Specifically, he's interest in the impact of weapons (guns), disease (germs), and technology (steel) on cultures. For example, he asks: Why did the Europeans have the technology to "discover" North America and the superior weapons to conquer it -- not vice versa? And a related question: Why did European diseases wipe out huge numbers of native Americans -- not vice versa?

His answers take a book to explain. Along the way, he ponders the invention of agriculture, the domestication of animals, how diseases develop and spread, how technology moves between cultures, the shape of continents, and the rise of specialized classes of people (like soldiers and scientists). It's utterly fascinating. (If I had one quibble, it's that Diamond doesn't consider what Thomas Sowell calls "human capital" -- the beliefs, habits, and values of different societies -- when considering why they thrived or stagnated.)

Why am I telling you about this book? Because of some off-hand comments Diamond makes. In a section that examines the rise of chiefdoms (read: proto-governments), the author notes that many of these early rulers were nothing more than "kleptocrats" -- plundering the masses for their own pleasure and power. He wonders: "Why do the commoners tolerate the transfer of the fruits of their hard labor to kleptocrats?"

Yes, we Libertarians wonder the same thing! But Diamond offers a "big-picture" answer by identifying some common trends and tactics among hundreds of societies over thousands of years.

His answer: "Kleptocrats throughout ages have resorted to a mixture of four solutions: 1) Disarm the populace, and arm the elite... 2) Make the masses happy by redistributing much of the tribute received, in popular ways... 3) Use the monopoly of force to maintain public order and curb violence... 4) Construct an ideology or religion justifying kleptocracy."

By the way, Diamond isn't passing judgment here. He's simply stating a simple truth: People in power want to stay in power, and have, throughout history, developed certain effective methods to accomplish that.

From those methods, you notice there's one most Libertarians will appreciate as a legitimate function of government: It's #3, protecting individuals from criminal force.

But the other methods should give us pause. Over the past 22 centuries, as America has moved from a country with a strictly limited government to one with a vast, ever-expanding government, how many of those "kleptocratic" techniques have we seen?

* Disarm the populace. America's tens of thousands of gun control laws seem to qualify, wouldn't you say?

* Make the masses happy by redistributing much of the tribute. From Social Security to AFDC; from rent control to corporate welfare; from subsidized college loans to small business grants, American politicians have perfected "redistribution" to a degree unimagined by primitive chieftains.

* Construct an ideology or religion justifying kleptocracy. No, big government isn't the official "religion" of this nation. But is there any doubt that it is the dominant ideology?

What's my point? It's this: Americans have always prided ourselves on the fact that we live in a nation unlike any other; one that enshrined the rights of the individual and bound the government "with the chains of the Constitution."

Isn't it a shock, then, to realize that most American politicians behave no differently than the most primitive "kleptocrats" throughout history?

Consider that question the next time you hear a politician calling for another gun control law, demanding a new government program, or extolling the "virtues" of big government. And ask yourself: Is that a politician speaking -- or a kleptocrat?
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Monday, September 08, 2003
By Jim Hightower

Sometimes, political posturing reaches a level that makes me go from merely gritting my teeth... to wanting to puke.

That's precisely how I feel as I see the White House engaged in a vile, disgusting betrayal of America's military veterans. Yes, the very Bu****es who constantly exhort you and me to "support our troops" and who crassly pose George W in front of the troops for his political gain – these duplicitous game-players are going all out to kill legislation that would give a simple measure of fairness to some 700,000 disabled and desperate veterans.

These are front-line, career soldiers who were injured in World War II, Korea, Vietnam, and other wars. Yet, under an old law, these aging veterans are having their retirement pay docked for every dollar they get in disability benefits. In short, they are forced to pay for their own disabilities, which they incurred in military service to their country.

A large, bipartisan majority in congress supports a bill to fix this, providing full pension and disability for these deserving vets. Bush himself promised in the 2000 campaign to rectify the unfairness, and he pledged just before being sworn in that "promises made to our veterans will be promises kept."

He lied. The White House now promises to veto the bill. Pentagon chief Donnie Rumsfeld even went to congress in July to tell lawmakers personally that Bush would slap the vets with the veto, declaring that the bill's five-billion-dollar-a-year cost would break the budget. The bitter unfairness and raw stupidity of that statement is breathtaking. Rumsfeld routinely throws hundreds of billions of dollars at fat-cat Pentagon contractors to make overpriced and unneeded weaponry, but when it comes to real need and doing what's right, he suddenly turns into a penny-pincher.

Let's not just puke – let's support the vets! Call: the White House comment line: 202-454-1111.
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