Maximum role of Government?

[myrkul]

Have a look at the Nordic Power Market which used to be a monopoly, then deregulated, and prices went through the roof.

Did you consider how much tax money was no longer being spent on subsidizing that industry?
Did you consider the real costs of producing electricity?

No, of course not. You only looked at the number on the bill.

Also, didn't you argue that deregulation and competition would lower the price for the consumers? How come that didn't happen? Monopoly gave the lowest prices. I suppose the market just wasn't free enough, right? It's not like your theory isn't always right?

Oh yes, of course, a subsidized industry would definitely have lower prices when privatized. 

Removing a monopoly typically lowers prices. Removing a subsidy typically raises them. In the end, the market will resolve the prices.

[NghtRppr]

Removing a subsidy typically raises them.

Yes, if you only look at the price on the shelf at the supermarket. However, if you take into account all the hidden costs. Removing a subsidy would lower the real cost. You have less money being taken from taxpayers, less paperwork, less transaction costs, etc, etc.

[JA37]

Oh yes, of course, a subsidized industry would definitely have lower prices when privatized. 

Removing a monopoly typically lowers prices. Removing a subsidy typically raises them. In the end, the market will resolve the prices.

Only one provider meant no cost for advertising, everybody who wanted power had to pay. They made a profit, although small, and the Nordic countries had the lowest power fees in Europe. That changed with deregulation. The state still makes money, probably more than before, and the consumers have to pay.
But feel free to ignore reality if it doesn't fit your theory.

[myrkul]

Oh yes, of course, a subsidized industry would definitely have lower prices when privatized. 

Removing a monopoly typically lowers prices. Removing a subsidy typically raises them. In the end, the market will resolve the prices.

Only one provider meant no cost for advertising, everybody who wanted power had to pay. They made a profit, although small, and the Nordic countries had the lowest power fees in Europe. That changed with deregulation. The state still makes money, probably more than before, and the consumers have to pay.
But feel free to ignore reality if it doesn't fit your theory.

Why is this? I'm genuinely curious.

[NghtRppr]

Only one provider meant no cost for advertising, everybody who wanted power had to pay.

Yet again, you only focus on one thing. How was the customer service? How long did it take for outages to get fixed? How often did outages occur? How efficient was their grid? Did they support purchasing surplus power from solar panels or wind turbines? If so, what was the price per kilowatt hour? Did they have different kinds of meters, digital meters, analog meters, etc?

You see, competition doesn't just lower prices. It also raises quality and increases variety. Try to look at the big picture instead of whatever agrees with your conclusions.

[ascent]

Why is this? I'm genuinely curious.

Utilities are often a better deal for the customer when there is allowed a single provider. There are associated fixed costs with running a utility, and when it is divided up among many providers, the fixed costs become a larger percentage of the total revenue. Furthermore, as pointed out, there is probably less need for marketing.

There is no mystery here. It's quite common for regions to only have one utility provider for any given service. It's typically regulated and allowed, and often encouraged by the various governments in charge. It's not some malicious scheme on the part of governments to destroy your freedom.

[myrkul]

Why is this? I'm genuinely curious.

Utilities are often a better deal for the customer when there is allowed a single provider. There are associated fixed costs with running a utility, and when it is divided up among many providers, the fixed costs become a larger percentage of the total revenue. Furthermore, as pointed out, there is probably less need for marketing.

There is no mystery here. It's quite common for regions to only have one utility provider for any given service. It's typically regulated and allowed, and often encouraged by the various governments in charge. It's not some malicious scheme on the part of governments to destroy your freedom.

Thanks for answering, but that's a totally different question. I was referring to the bolded section.

[JA37]

Only one provider meant no cost for advertising, everybody who wanted power had to pay. They made a profit, although small, and the Nordic countries had the lowest power fees in Europe. That changed with deregulation. The state still makes money, probably more than before, and the consumers have to pay.
But feel free to ignore reality if it doesn't fit your theory.

Why is this? I'm genuinely curious.
[/quote]

Higher prices for the consumer, more tax revenue.  But didn't your theory say the opposite? Or were you arguing that deregulation is good for the state?

[myrkul]

Higher prices for the consumer, more tax revenue.  But didn't your theory say the opposite? Or were you arguing that deregulation is good for the state?

Oh, so... the power is taxed now? Instead of subsidized? Yeah, of course the price went up. Don't even need a degree in economics to see that. Hell, don't even need a GED.

[JA37]

Higher prices for the consumer, more tax revenue.  But didn't your theory say the opposite? Or were you arguing that deregulation is good for the state?

Oh, so... the power is taxed now? Instead of subsidized? Yeah, of course the price went up. Don't even need a degree in economics to see that. Hell, don't even need a GED.

What do you mean "now"? And what do you mean subsidized? There was always taxes, and doesn't subsidizing imply that the you don't make money, but instead lose it to keep price down? And what's so mystical about more money to tax, higher tax revenue?

[myrkul]

Higher prices for the consumer, more tax revenue.  But didn't your theory say the opposite? Or were you arguing that deregulation is good for the state?

Oh, so... the power is taxed now? Instead of subsidized? Yeah, of course the price went up. Don't even need a degree in economics to see that. Hell, don't even need a GED.

What do you mean "now"? And what do you mean subsidized? There was always taxes, and doesn't subsidizing imply that the you don't make money, but instead lose it to keep price down? And what's so mystical about more money to tax, higher tax revenue?

I'm assuming you're one of those people affected? I'd love to see before and after bills so we can compare them. It would be a great way for you to prove - if you can - just how wrong I am.

[Grant]

Utilities are often a better deal for the customer when there is allowed a single provider. There are associated fixed costs with running a utility, and when it is divided up among many providers, the fixed costs become a larger percentage of the total revenue. Furthermore, as pointed out, there is probably less need for marketing.

That's a really interesting statement, i'll give you something to think about here:

The Polish post which is state owned has a monopol on sending letters under 50gramms. So what do private companies do? Well, yes you guessed it, they attach a piece of metal - yes a square piece of metal, which makes even a normal letter weigh more than 50gramms. Now imagine, for the private company it is worth producing the metal plate, glue it on the envelope and then delivery it to the customers and still make money. During a meeting with the Polish post last week, the people there could just not believe that the private companies make money with such a trick and were stunned. We in our company receive daily letters with the metal plate on the envelope. Imagine what amounts of metal plates have to be produced and what extra machines you have to buy to glue the plates on the enevelopes just to overcome one absurd law.

The funny thing is that nobody actually bothers to change it since the private companies still make enough to grow quickly, this situation will apparently last until 2013 when the Polish Post supposedely loses its monopol. As people would say - Only in Poland - tylko w Polsce!

Source: http://absurdypolskie.blox.pl/html (and yes this is no bullshit, i can verify that both the polish monopoly mail-service is super-inefficient, and that there is a "law" that forbids any competitors to send mail that is under 50gram.

Isn't it quiet amazing how iefficient the monopoly is, since a competitor can send simple mails attached with a 50gram weight and still deliver the service at lower cost? (despite the fact they need to spend more on marketing).

No monopolies aren't efficient, if don't believe me go to any country that has monopoly on some services and compare the quality of service.

[AyeYo]

Isn't it quiet amazing how iefficient the monopoly is, since a competitor can send simple mails attached with a 50gram weight and still deliver the service at lower cost? (despite the fact they need to spend more on marketing).

No monopolies aren't efficient, if don't believe me go to any country that has monopoly on some services and compare the quality of service.

Where did it say anything about lower cost?  It said the companies still turn a profit, but it said nothing about lower cost to the consumer.

Additionally, do you have any idea how cheap a little stamped piece of steel is?  Of course they're able to still turn a profit by capturing an entire market they would otherwise not have access to for only an additional $0.00001 per letter.

[indio007]

Isn't it quiet amazing how iefficient the monopoly is, since a competitor can send simple mails attached with a 50gram weight and still deliver the service at lower cost? (despite the fact they need to spend more on marketing).

No monopolies aren't efficient, if don't believe me go to any country that has monopoly on some services and compare the quality of service.

Where did it say anything about lower cost?  It said the companies still turn a profit, but it said nothing about lower cost to the consumer.

Additionally, do you have any idea how cheap a little stamped piece of steel is?  Of course they're able to still turn a profit by capturing an entire market they would otherwise not have access to for only an additional $0.00001 per letter.

I think the point is not the price of the metal. The point is the price to ship something would added weight. The energy cost is obviously higher, which the primary cost in shipping.

[AyeYo]

Isn't it quiet amazing how iefficient the monopoly is, since a competitor can send simple mails attached with a 50gram weight and still deliver the service at lower cost? (despite the fact they need to spend more on marketing).

No monopolies aren't efficient, if don't believe me go to any country that has monopoly on some services and compare the quality of service.

Where did it say anything about lower cost?  It said the companies still turn a profit, but it said nothing about lower cost to the consumer.

Additionally, do you have any idea how cheap a little stamped piece of steel is?  Of course they're able to still turn a profit by capturing an entire market they would otherwise not have access to for only an additional $0.00001 per letter.

I think the point is not the price of the metal. The point is the price to ship something would added weight. The energy cost is obviously higher, which the primary cost in shipping.

Again, it's trivial when considering that they're capturing an entire market they otherwise would have a 0% share of, and it costs them nothing more than fractions of fractions of a penny in materials and an insignificant amount more weight.


Look at it the other way if you want to, how high must their profit margins be if they buy and ship metal plates and STILL turn a large profit?  Obviously they could afford to offer consumers a much lower price than they currently are.


It's all irrelevant anyway, exceptions don't disprove the rule and we know nothing about how inefficienctly run the Polish mail service is to begin with.

[myrkul]

Have a look at the Nordic Power Market which used to be a monopoly, then deregulated, and prices went through the roof.

It's all irrelevant anyway, exceptions don't disprove the rule

Thanks! We're done here.

[AyeYo]

Have a look at the Nordic Power Market which used to be a monopoly, then deregulated, and prices went through the roof.

It's all irrelevant anyway, exceptions don't disprove the rule

Thanks! We're done here.

It doesn't work like that.  Your rule is that monopolies are always worse than competition.  It only takes one instance of that rule not being true to disprove the rule.

On the other hand, I'm NOT saying that monopolies are always better than competition.  I'm saying things need to be taken on a case-by-case basis - which is obviously something you'll never understand, living in a black/white world and all.

[ascent]

Thanks! We're done here.

We were done before we even got started. It's obviously not your intent to absorb any knowledge that might expand your worldview. I gave you plenty of links.

[Grant]

Where did it say anything about lower cost?

Read that post as many times as its necessary for your to understand that. Or prove it wrong, buy a bag of 10000 postcards, and put them in your car, measure your gasoline consumption (pr km or miles driven) for a few days, then do the same expirement but replace the 10000 postcards with 10000 x 50gram metalplates. You're going to tell me you wont notice an economic difference ? You're either a troll, or a complete moron.

[myrkul]

It doesn't work like that.  Your rule is that monopolies are always worse than competition.  It only takes one instance of that rule not being true to disprove the rule.

No, I am saying that competition is always preferable to a violent monopoly. Natural monopolies sometimes arise out of competition, when it is more efficient for a single company to provide the services.