Generators and users of electricity operated on top of that platform. Generation is a competitive market--many entities can be delivering power into the grid, and the product is fungible. Users don't care where the electricity comes from, just about the price. Electricity generation is therefore quite suitable for market mechanisms.
What happened in Texas was not an example of a privatized "platform" failing. The platform (the grid) was fine. Instead, adverse weather events caused a shortage of the product (electricity) running on top of the platform. Put differently, this is not like a scenario where Texas decided to privatize roads and things went sideways. It's like a scenario where packages didn't get delivered on Christmas because COVID caused an unexpected spike in demand for package delivery, as well as an unexpected shortage of drivers for delivery vehicles.
as an intuition, a solar panel farm in some isolated arizona desert doesn't help folks in maine. conversely, as neither region has that many local suppliers, a few private businesses making rational personal $ decisions to not supply in critical scenarios will put all citizens at risk when those scenarios happebs.
(written as someone living through periodic wildfires allowed through similar market optimism.)
ERCOT serves over 26 million customers in Texas. That's more than large enough to have a highly functioning market.
> and private co's decided to cheap out on weather protections?
What on earth makes anyone think that government-owned power generators in Texas would have invested in weather protections? The sewer systems around the country are publicly owned, yet the public utilities "cheap out" on capacity and routinely dump massive amounts of raw sewage into local waterways during big rain storms that happen every year or two. People are attributing to the structure of the market a failure that's more about the inability of entities in general (public or private) to deal with black swan events.
RE:Weather, when gov-funded climate change scientists collectively predicted adverse weather phenomena would continue accelerating in accordance to global warming, and a lot of communities have been living through it? I started hearing about that 10-20 years ago, it's not news. Next you'll tell me that continued beachfront erosion merits gov bailouts of insurance companies because we couldn't predict that either..
Around the country, there is a $4.5 trillion infrastructure backlog. https://www.asce.org/templates/press-release-detail.aspx?id=.... Almost all of that backlog is on the plate of public entities (road works, sewer works, bridges, etc.) Where do you live that the government has actually addressed crises that it faces in the present and has time to pro-actively address stuff scientists are talking about happening years in the future?
Yeah, maybe competent and pro-active bureaucrats at a government power utility would have avoided this problem. It also could have been avoided by running power plants on unicorn manure, which I hear has natural anti-freeze properties.
Yes, a lot of people live in denial. In security-related areas of all kinds where the ROI is largely unobservable loss prevention, that's why leadership-level people know to ask for budget immediately after any incident... because important stuff doesn't get funded or enforced otherwise.
And agreed, I'm not a superfan of Amtrak. There's a wide spectrum on how to do things. The more I learn about any individual one, the more I learn that most things appear broken from the inside, so I am both consistently awed things work in the daily case, and know that left alone, they won't in the edge cases.
It's not shifting the goal posts. A company that feeds into a market with 26 million customers is not so "local" that a free market can't work. That's bigger than most countries. And you've offered no evidence that a public utility would not have "cheaped out" on weatherization.
> Yes, a lot of people live in denial. In security-related areas of all kinds where the ROI is largely unobservable loss prevention, that's why leadership-level people know to ask for budget immediately after any incident... because important stuff doesn't get funded otherwise.
Disaster after disaster happens, and important stuff still doesn't get funded in the public sector. There is a $100 billion shortfall in water system funding: https://www.infrastructurereportcard.org/cat-item/drinking_w.... Did the Flint water crises have any effect on that? No. Because political entities that are accountable to voters for water rate increases aren't any more willing to invest in risk mitigation than private companies.
> And agreed, I'm not a superfan of Amtrak. There's a wide spectrum on how to do things.
Most public infrastructure in the United States is run like Amtrak. The D.C. Metro had to shut down automated train control (self-driving), which was a feature built into the system in the 1970s, because they had let the track sensors deteriorate so much. We had to shut down the subway in D.C. for weeks at a time a couple of years ago because it was literally killing people. New York's subway system is in the same sorry state: https://www.vox.com/policy-and-politics/2017/7/11/15949284/n...
If Maine has a shortage, they aren't going to get power directly from Arizona, but couldn't they get power from New Hampshire? If New Hampshire doesn't have any spare capacity, couldn't they still supply Maine and get some from Massachusetts to cover for what they send to Maine? And if Massachusetts doesn't have any spare, can't they similarly go ahead and supply New Hampshire, making it up with power from whoever is next west of them, ultimately ending up with Arizona's extra solar power allowing Maine to get through a shortfall?
> The Eastern Interconnection and the Western Interconnection are the largest. Three other regions include the Texas Interconnection, the Quebec Interconnection, and the Alaska Interconnection. Each region delivers power at a nominal 60 Hz frequency. The regions are not usually directly connected or synchronized to each other, but there are some HVDC Interconnectors.
> I don't see why solar in Arizona would not help Maine
Arizona power companies have essentially made home solar system uneconomical.
https://www.huffpost.com/entry/solar-arizona-net-metering_n_...
One of my takeaways is that you really don't want people trying to attempt DIY heating systems. There were ~450 calls for carbon monoxide poisoning, related to people trying to heat their homes with non-electric sources or sources that worked at all. A lot of people tried to run camping stoves indoors. Others ran generators indoors. I believe a girl died because her family tried to stay warm in the car in the garage with the door closed.
> with the available power going to those willing to pay more, presumably because they need it more or can afford it.
I vehemently disagree with this. Wealthy customers should not be able to push the price of electricity high enough that others can't afford to heat their homes. Letting the market figures it out means that those with financial means get to make a choice about what to do, while the poor are universally shoehorned into the worse of the two options.
A significant part of the base load is inelastic demand. People need to heat their homes. People need their refrigerator to work so their food doesn't go bad in a time when you may or may not be able to get groceries. People need to charge their cellphones so they can let their family know that they're okay.
If there were, as you say, it still might not work. But there were a lot of pictures of empty buildings with lots of lights on, etc. so there are inefficiencies. And if customers were automatically switching off (or simply reducing their own usage) as prices went up maybe prices would never have gotten so high. Ideally it would sort of be a fine-grained "rolling blackout" where priority is determined by what a customer chooses to purchase given all the variables that only the customer is aware of. That's a functioning market.
I agree that it may be completely impractical to make it work for electricity.
You could maybe compete on interstate highways or other long-area bits. Maybe. That's stretching it.
Build a competing water supply network to each house? Another set of sewers? Electricity distribution? Hell no.
IMHO all of these things should be communal property & development. The preconditions for free market are not met, it's not possible to compete; so the whole market equation falls apart.
Hand the operation & maintenance out to some company or whatever, there it's possible to compete. But not the actual physical infrastructure.
Same thing in many other places - in Kyoto there is big and nicely build station by JR and, Transport Tycon style 200 meters from it another big station by IIRC Kintetsu.
Or in the middle of Tokyo, the Minami Senju station is effectively three station - One on the JR Joban line, one on Tokyo Metro and deep bellow another one on the Tsukuba express line.
So its definitelydoable, even in the most densely populated of places, at least with rail.
Also when you compare with places that have little to no competitionon the rail network you can clearly see the lack of service quality resulting from that. Well, if you get any service at all. :P
Land owners whose land is taken away are given new plots of land that are smaller, but closer to stations. These smaller plots are worth more than the original land because they are now near (future) train stations.
[0] http://www.wctrs-society.com/wp-content/uploads/abstracts/ri...
BTW, that's something else I noticed in Japan - train stations are almost always hubs of commercial and often also cultural activity - there are shops, hotels, good restaurants and often also galleries, event spaces, monuments and even the buildings themselves are often architectonic masterpieces (for example JR Kyoto station, just check it out!). This definitely helps with passenger numbers and keeps the whole thing sustainable not to mention profitable.
In comparison Czech & Slovak railway stations (Prague, Brno, Bratislava) are often run down, dirty, fregvented by questionable people who aren't going to ride the trains and any shops or food places are cheap low quality ones. As a result one tries to spend as little as possible on these train station, let alone spend there any money for the few sub-par amenities available.
It's really strange why it is like this, given the missed commercial opportunities, seems to be much better in other european countries (Vienna, Eindhoven, etc.).
I would actually consider this an odd example of "long-range" transport.
The second avenue subway was the most expensive subway in the world on a per mile basis. Considerably more expensive than Paris or Tokyo
> The estimated cost of the Long Island Rail Road project, known as “East Side Access,” has ballooned to $12 billion, or nearly $3.5 billion for each new mile of track — seven times the average elsewhere in the world
Similarly, the fare only covers around 50% of the operating costs which hardly seems fair for NY state taxpayers that pick up the expense despite receiving no benefit.
The competing services for infra in NYC are cabs, car pools, private buses, bike rentals, scooters, subways. For getting into/out of the city, you have a number of bridges. For instance, I can take Lincoln tunnel, Holland Tunnel or ferry. It would be great to have more options and obviously its not easy to build tunnels, but private ferry and water cab services could be expanded
[0] https://www.nytimes.com/2017/12/28/nyregion/new-york-subway-...
[1] https://www.bloomberg.com/news/articles/2019-03-14/what-s-a-...
Why should a relatively poor upstate new york taxpayer be paying 50% of the fare of some young finance bro going to work?
Also removing prices removes information. For instance the ferry costs something like $15 per rider to operate compared to around $5 for subway. With both trips at the same price to the consumer, you make the marginal rider indifferent to the two in terms of price where it would be beneficial to have that information to save money and divert resources to the more effective mode
> roads to places I'll never go
Gasoline tax and toll roads are a good way of linking those who benefit to those who provide the good.
> schools my child doesn't attend
A lot of people move out of high tax neighborhoods when their kids graduate high school. I don't think school should be tied to real-estate anyway because it creates really perverse dynamics (people without money end up going to the worse funded schools). So that model doesn't exactly work well right now
> medical procedures that I don't need
I buy health insurance voluntarily and gladly pay for medical procedures that I don't need on the off chance that I need an expensive medical procedure in the future
Or to look at it another way: assume some genie offered to dismantle the NYC train/subway system for free. Assume you're the government and only care about maximizing revenue. Would that be a good deal? Of course not, even if the system wasn't self-sustaining from fares.
> The competing services for infra in NYC are cabs, car pools, private buses, bike rentals, scooters, subways.
You're conflating the infrastructure with the service on top of it. The equal comparison would be railroad project to motorcar roads & bridges. And the latter also have their share of cost overrun stories...
(Also, bridges are the rare case where a ship can compete. But, well, every rule has its exceptions.)
Oh and the fact that it's (even unreasonably) expensive has no bearing at all on the argument. There ain't gonna be some competitor building their own railway line regardless, or especially since the first one was so expensive.
Even here though, there is a coordination problem to ensure various companies remain mutually compatible.
Then again, I don't think it's viable to build subway tracks and tunnels to compete. Even if you have space under the earth, there may not be space for more stations, and good station locations are important too.
It's yet another monopoly problem even though it doesn't look like it at first glance. Each house basically sits on a piece of mlonopoly for the parcel below it, preventing others from use.
It's not much of a big deal in general, but in congested big cities, it is a problem. It's the cause of high rents (by Ricardo's law od rent).
The solution is also a kind of monopoly tax - land value tax (LVT). You pay yearly percentage of the market value. Achieving almost optimal allocation instead of current hereditary one.
Establishing "market value" is the rub. Texas for example, does not make real estate sales prices public. This has a lot of perverse effects, one of which is deep-pocketed commercial interests have pummeled public assessors until commercial property is tacitly way undervalued for tax purposes, yet is openly sold for much more than the purported tax basis.
I've heard of a system I found interesting (but alas, can no longer find a reference to link) to competitively establish tax basis on commercial real estate (I wouldn't want this on natural person owner-occupied residential). You claim whatever tax basis you want. It gets published in the open. Whoever can put up completely unencumbered cash over the barrel for that basis + 7% or more though, can purchase the property. And by unencumbered, I mean not even investor syndication. Real, natural person, outright first and only lien on the cash, absolutely no liens tolerated against the property tied directly or indirectly to the cash.
Cash goes into government-controlled escrow. Current owner has one year to pay difference on one year's worth of new imputed tax basis represented by the escrowed cash, and continue from that point forward with the new basis. If the owner comes up with it, the bidder loses 6% of the cash (or whatever the real estate industry commission structure is at that time in that locality) to the local government as commission to facilitate the price discovery. Bidder can increase bid at any time by adding to escrow account, until either current owner "sells" to bidder (and escrow releases 100% to the current owner, no commission), or bidder walks.
I haven't sat down to really pencil it out, but I'm sure if someone did they'd find a way to game such a system, since I figured it otherwise would have been put into use.
There is one major consequence: investor/VC backed/mega-rich major chains would instantly drown out family owned and small businesses that can't compete with gentrification. This is already a plague with Walmart and Amazon absolutely flattening local economies, your proposal would make it an epidemic of yet-unimaginable scale.
Like I said, I found the entire idea of a competitive market in price discovery to establish tax basis fascinating, not the specific implementation details.
Land ownership is problematic because neighborhood improvements can be extracted via land ownership. The most effective policy against this extraction is to simply tax the land itself and thus turn it into a liability if the value of the land grows. Ideally, property taxes would be replaced with land value taxes.
If land is a liability the only reason why people would purchase it is to improve the value of the land and make it available for productive uses like renting it out to a large number of people.
If anything, this strengthens the argument. You can buy/rent/... a different parcel nearby, and this only affects you and your planned use of the building. But you can't switch to a different road network, and this affects everyone in their daily life.
That said, I also agree with the sibling post that this is also a problem, just of a different kind.
Oh no. Construction, operation and maintenance of electricity and other vital networks (water, gas, sewage, telecommunication) should be done by the government as a government agency with a quality of service mandate and not in form of a profit-oriented company no matter if government owned or private owned / publicly traded - because "competition" and/or a focus on costs is always going to end in price and wage dumping, cutting corners and sometimes in deathly disasters (California fires caused by cutting costs on maintenance, Flint water scandal, Texas infrastructure collaps due to un-hardened systems, ...).
This is not an obvious problem nor solution. As posted downstream, risk of polar vortex was even known and discussed by the general manager of the facility: https://www.energy.gov/sites/prod/files/2014/08/f18/karnei_s...
This really applies to the power grid itself. Even the power plants aren't covered by the argument, since if you have a reasonable grid, you can build another power plant of any kind you feel viable in some reasonably suitable place.
[Ed. add.: the grid is actually the market. It facilitates the transactions between power plants and consumers.]
Why do you could think one could recreate such a large cooperative like this without much trouble? Isn't the likely outcome of this bankruptcy a sale of assets to private equity: a situation that can probably never be reversed?
What do you think this cooperative did if it was not facilitating the transactions between power plans and consumers? I'm confused by your assertion.
The power grid is the platform; I'm not sure how the original poster intended to apply the platform argument to the cooperative.
As far as recreating the cooperative goes: it doesn't need to start large, and I'm reasonably sure it doesn't hold much in assets. My understanding is that this cooperative is simply a collective of buyers who "pool their shopping", so money flows in and back out. A new cooperative may need to work its way back up to bulk pricing, but that should be doable?
[1] https://www.nytimes.com/2000/06/07/opinion/reckonings-a-rent...
There is this mindset that capitalism is always wrong when the mindset should be capitalism is not always right, which is a completely different perspective. However, I am really disappointed that people don't think about how to make the system work for themselves. Corporate abuse doesn't necessarily have to be the rule. The political environment could be shifted to favor workers instead and to a certain degree this would benefit everyone, not just one side.
That’s not “well understood” at all. Folks don’t remember how dysfunctional and sclerotic nationalized industries were in the 1950s and 1960s. There is a reason nearly every developed country got rid of them.
Fortunately, we can see that 40 years later there were no unpleasant side effects from introducing markets into almost every business and service /s.
I don't agree with Rayiner about Texas, but I don't think you can wave your hands at 60s-70s deregulation and say "lol Milton Friedman". The deregulators were right about a lot of stuff.
Cite?
I have lived in two countries, one with privatized market based grid and have not yet had one power failure, one with nationalized grid and producers grid that had daily 8 hours power outages for weeks on end to the point where year on year per capita electricity usage (an important measure for development) was going down.
Anecdotes are not data, but all I can say is that most definitely every nationalised grid does not run better than every privatized grid, and without some data to back your claim I am skeptical.
Its well understood by people who studied it well. However, there are still many pushes and arguments for privatisation that do not take these well understood facts into account.
Networks and infrastructure = little to no competition. Eg. networks naturally settle in a optimal geographical location and utilize economy of scale then. Can't compete with that. So don't privatise platforms. Rather - make them monopolistic and make them share the revenue with public using a monopoly tax. AT&T model.
Translated to programmer speak: society's OS (law,defence,policing,roads,energy,networks,sewers,etc.) should be uniform and near monopolistic to maximize economy of scale.
Society's Apps (businesses) running in the ecosystem of the OS should be private, numerous and competitive as much as possible.
Occassionally you stumble upon a private business which develops a new network model and after some time it should be refactored from being an App to be part of the OS (eg. twitter).