Date: Thu, 21 Dec 2000 15:39:24 -0500 (EST) From: Tim McMillen <timcm@umich.edu> To: David Schwartz <davids@webmaster.com> Cc: "Crist J. Clark" <cjclark@reflexnet.net>, chat@FreeBSD.ORG Subject: RE: CA Power Shortage (was Re: Why do you support Yahoo!) Message-ID: <Pine.SOL.4.10.10012211502080.21753-100000@frogger.gpcc.itd.umich.edu> In-Reply-To: <NCBBLIEPOCNJOAEKBEAKAEHDMJAA.davids@webmaster.com>
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On Thu, 21 Dec 2000, David Schwartz wrote: > > > It seems the problem is economic and political. There is no > > economic incentive for the power companies to invest in power grid > > upgrades. Why should a power company spend billions on something that > > benefits their competitors as much as themselves. Hint: they won't. It > > is the classic economic free-rider problem. Why spend money when you can > > take a free ride on what somebody else spends. And while I generally > > subscribe to the Laisse Faire school of thought, it is generally > > considered that there is no solution to the free rider problem (in public > > utility cases) except for government intervention. And the CA government > > does not seem able to get enough agreement on how to do what many people > > know needs to get done. > > Obviously it will take a government-supplied solution to fix a > government-created problem. If companies could own the improvements they > made to the power grid and charge their competitors a price to benefit from > them, there wouldn't be a free-rider problem. California's current Yes, but how do you institute this? My point was that power companies never would have created a working power grid in the first place due to the free rider problem. It would take an unusual amount of cooperation. Not impossible, just highly unlikely. Instead, they would have each tried to make their own platform that benefited them the most and made everyone else pay them excess royalties to use it. That makes economic sense and is being the most responsible to their shareholders. But it is not the best for everyone. It is exactly what happens in the computer world. Microsofts API, Sun's, etc. It's also the exact same reason that the highway infrastructure will not get (and never would have gotten) built by private companies. Everyone benefits from it, but not enough to spend their own cash if everyone else won't do it. So in infrastructure (like the power grid, even OS API's) cases, free competition gets locked into sub optimal outcomes and will not get out of it by free competition. Now it is possible for a non government coalition to do this, but it is unlikely that they would get the support needed or the structure organization, proper management, etc to do so. Especially given the current situation, but also in the first place. For computers I believe this is possible though. The best possible solution seems to be a unified API that is technically superior and that everyone (all OS makers) implements. That way programs only need to be written once, never ported. It is a powerful idea and Sun tried to corner it to their advantage, once again demonstrating my point. There are definite disadvantages to a unified API. Sacrifices would have to be made, as no one API could be the best for every aspect. But the advantages would be huge. If the interface was well desinged, understood, and documented, there would be vastly greater competition in the application software market and quality would be greatly improved. This standard API is the one advantage that M$ offers and is the only reason they've been able to achieve the amount of lock in that they did. Everybody knew that technically their OS sucked (they did too, they were just making scarily good business decisions), but people still used it because it was a defacto standard. You could go anywhere and buy software for it. "Who cares if the os and the app crashes if I can buy it anywhere" beat out better technical operating systems. The standard API is what UNIX lacked and why so many people stopped writing software for unix. When you had to write and maintain different versions to run on xenix, solaris, sco, etc, it just wasn't worth it. > electrical system was entirely crafted by government regulators. > > If you put perverse economic incentives on companies, they will act > perversely. They have to, because they have an obligation to protect the > financial interests of their shareholders. So you'll find California energy > producers selling energy to other states when California is in a level 3 > emergency simply because these other states can pay more. > > One thing, however, should be apparent to anyone who understands economics. > If the government acts to hold prices down, shortages are pretty much > inevitable. Very true unless manged correctly. What CA is trying to do is have it both ways. Have free competition, while holding down prices. That is guaranteed to not work. However, if price, supply and investment in capacity and infrastructure are well managed, a government agancy can hold prices low (at a socially optimal level). Unfortunately *can* make it work is very different from making it work. This is where I have problems because I don't really believe in the governments ability to make the right decisions either. Obviously they are not [making those correct decisions], even when what they are doing is clearly incorrect. Tim To Unsubscribe: send mail to majordomo@FreeBSD.org with "unsubscribe freebsd-chat" in the body of the message
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