Wednesday, May 16, 2007

The Joys Of Deregulation

The cost of living has skyrocketed in Ireland, making the small country one of the most expensive places to live in Europe. Fine Gael, if they can get into office, will make things all better.

High prices in certain sectors are due to Government regulations, according to Richard Bruton of Fine Gael. He blames all the fees and added costs, which do nothing but bring in more money which acts as a sort of tax that isn't called a tax. FG will put an end to this sort of nonsense. They'll set fees in accordance with an international benchmark, all very efficient with rate hikes in line with the rate of inflation. However, if Government is using the inflated fees to pay for Government, then how will FG pay for Government without the fees? By cutting programs? By raising taxes? It has to be one or the other.

And let's look at utilities. Specifically, let's tackle the high cost of electricity. FG will introduce competition into the marketplace. It's been done in Illinois, and from experience I can tell you it's been dazzling. Consumers pay more now than they ever did before, thanks to deregulation and the removal of government control. The newly privatized companies are making enormous profits, and their shareholders are thrilled to bits.

Deregulation sounds lovely. Competition, that's the ticket. New firms will spring up to take advantage of a highly desirable commodity. New firms will want to invest billions in construction of power lines, electric production facilities.....oh, wait, no they don't. That's the gaping hole in the plan. The cost of starting up a company to generate and distribute power is cost-prohibitive, therefore, deregulation does not bring about a decrease in consumer costs. Take the electric grid away from ESB, like the State of Illinois removed Commonwealth Edison, and companies will arise to buy existing power plants, and companies will arise to buy the electricity and distribute it, and consumers will have to pay more than before for the extra layer of bureaucracy.

To Fine Gael's advantage, and in spite of the quality of Irish education, few voters have taken a course in microeconomics and don't know much about the laws of supply and demand. Makes for fewer questions to answer.

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