Public Fuel and Power Act of 2014 (Final vote)

[Simfan34]

What incentive does the AEA or any of its sub-units have to increase efficiency or otherwise reduce production costs?

Well, there's the fact that it's a democratically governed structure, and the people running it have an obvious interest in making costs as low as possible for themselves.

The price is set at the national level, but the local and municipal sub-units are governed by representatives of local people and representatives of workers employed by that sub-unit. Local representatives have an incentive to hire as many people as possible, even if they aren't necessary, in order to get votes and benefit their local area. They have little disincentive to engage in such activity because the costs incurred by one sub-unit will have a minimal effect on the national price of energy. However, when many sub-units engage in such activity, the costs add up and energy becomes more expensive. It's kind of a tragedy of the commons situation where each sub-unit acting in the interest of its local area will increase the national cost of energy and make everyone worse off.

Similarly, worker representatives have an incentive for push for salary and pension increases regardless of the cost. Each individual sub-unit won't have a huge impact on costs, but it adds up at the national level. Furthermore, even national worker representatives have an incentive to increase salaries and pensions regardless of the effect on production costs, because AEA employees will still be marginally better off if their salaries are increased generously and the cost of energy rises.

Why hasn't this been responded to?

[Simfan34]

But surely these randomly selected boards (even if this was viable) would be susceptible to graft and generalised lobbying efforts by the unions?

[Simfan34]

They could easily persuade these random citizens with relatively small gifts to vote to raise their salaries. If I am your average Atlasian earning $45,000 a year, and some union person offers me a comparatively small $20,000 to vote to raise their salaries, how likely is it that I say no? Even if not so direct, how likely is it that, 10 years down the road, these randomly selected individuals would also be members of a union with a quid pro quo where their members all vote to raise wages for union workers in another sector?

[Simfan34]

What exactly is a "fuel company", anyway? I assume this would extend to suppliers of heating oil (isn't this a competitive industry?), but what about, say, jet fuel? Gasoline? At the very least the language needs to be more precise.

[Simfan34]

It depends. Are we also buying ExxonMobil et al? I don't think that is the intention of the bill but the wording has nothing that would preclude it. I found that power utilities produce revenue in the range of $470 billion a year, but that's not what we're looking for. If we were to go whole hog, we'd be looking in the area of anywhere between $1.5-$2.0 trillion.

[Simfan34]

Here are some facts to keep in mind. I have found some information showing the rates of profit, after tax, in the electric utility industry. (Source)

Q2 2014: 8.27 %   
Q1 2014: 7.79 %   
Q4 2013: 7.73 %   
Q3 2013: 6.96 %   
Q2 2013: 6.04 %

Hardly exorbitant. However, I do feel very uncomfortable arguing that certain industries deserve saving from expropriation, because they are not "excessively profitable", at all. It begs the question, however, as to why this bill is necessary.

[Simfan34]

muh private ownership of energy

I think you need a better reason at this point.

[Simfan34]

Ah, thank you- my next question was going to be when the vote on this closed, Mr (or is it Comrade?) PPT.

[Simfan34]

Not to mention come up with an actual reason.

[Simfan34]

Comrade TNF, the rules require a 24 hour vote change period for all votes that are not unanimous unless time has expired beforehand and it was started on the eleventh.

Reluctant Nay

As much as I want some kind of altnerative distribution network this is far too complex and whilst bore improved it I think it still contains provisions that will be hard to manage or otherwise problematic and would detract from the benefits of the providing an alternative setup.

For nearly five years now, people like myself have been looking to you, Senator Yankee, for leadership. I find it hard to believe that now, you oppose this bill only "reluctantly". That you feel such towards this utter catastrophe of legislation, that I find difficult for any thinking person to support, much less a self-declared conservative to regard with anything less than total and absolute opposition, is both shocking yet unsurprising. After all, your party, or at least several members of it, chose to hand the presidency to the man who now seems set upon signing this bill into law.

The fact that we are here today facing this predicament, is a heavy mark upon all of us who oppose the propagation, not to mention the implementation, of such complete nonsense as this, and it is a mark strongly made on people like yourself who seem to acquiesce to it. If there is a time to stand up and shout "NO!" I daresay now is that time, particularly for those who have made a name for themselves as leading voices. I understand you are facing challenges, and I wish you well. But that does not mean you must not resist calamities as strongly! Where is your voice?

[Simfan34]

So this fails then, it looks like. No matter, I'll simply reintroduce it into the queue and we can resume debate, since it looks like at least the majority actually wants to pass this bill, they just don't feel entirely comfortable with the version as is proposed.

In TNF's Atlasia, 70% against is a majority for. Things are truly going to rot.

[Simfan34]

Well let me repeat the words of Senator TNF- "the majority actually wants to pass this bill". This particular bill. By all means, we can poll support for nationalisation of the energy industry and see whether or not people support that. But there is no interpretation, no data, whatsoever that would allow one to conclude that a majority of anything supports this bill, or as far as we know, that "a majority of the country supports the broader premise" of nationalisation of that sector. Never mind the fact the poll had a "with modifications" option.

As for my estimate it was simply derived from the revenues of that sector, easily found online. It was in response to President Duke's question; if I were you I'd be more concerned with the lack of debate on this bill. This is ridiculous.

[Simfan34]

Well let me repeat the words of Senator TNF- "the majority actually wants to pass this bill". This particular bill.

Shhh

By all means, we can poll support for nationalisation of the energy industry and see whether or not people support that. But there is no interpretation, no data, whatsoever that would allow one to conclude that a majority of anything supports this bill, or as far as we know, that "a majority of the country supports the broader premise" of nationalisation of that sector. Never mind the fact the poll had a "with modifications" option.

As for my estimate it was simply derived from the revenues of that sector, easily found online. It was in response to President Duke's question; if I were you I'd be more concerned with the lack of debate on this bill. This is ridiculous.

A majority of the duly-elected Senators support it. A majority of the voters elected a President who openly supports the premise. I think that's the only polling we need. Despite your desire to turn everything into a popularity contest, you'd be wise to look at Labor's track record at completely bending opinion to our will when possible, and short-circuiting it when it's not.

I count five Senators.

Well let me repeat the words of Senator TNF- "the majority actually wants to pass this bill". This particular bill.

Yeah, but any reasonable interpretation of those words would imply that he thinks a majority of Senators exists to pass this bill provided the swing voters are placated.

You can quote surveys all you want (and it would be reasonable to do so in a different context), but let's not get caught up in the rigamarole of what he said. It's pretty clear what he meant by it.

That's quite fine,  and you're not really wrong, but the fact is there is no evidence that a majority of the population supports this move.

[Simfan34]

I count five Senators.

Do you do fractions? How about 6/11?

Ah, yes, I forgot there is a VP now... but does TheCranberry support this? I look forwards to the debate, and seeing the motivations behind this bill, and I hope it will be debated and justified rather than merely being shoved through without debate because... socialism.

Calm down everyone ill have a cost estimate that isn't just a political talking point coming your way.

Good to hear, Mr GM.

[Simfan34]

Yes, let's hope things go smoothly. I will just say that I welcome a good debate on this bill and thorough justification for it; it would be a shame if it were to be "short-circuited", as Adam put it, for political expediency.

[Simfan34]

There is also the question of how we "price out" foreign competition. Massive subsidies come to mind, and in that case, I imagine we'd be footing the bill. Unless you had something else in mind.

[Simfan34]

And of course it must be remembered that this is an industry presently operating at a profit; we'd be turning that profit into a loss. Since I know the VP-designate does not share the view that this legislation is necessary due to the inherent evil of private ownership, what, may I ask, are the motivations for your support? Is it to lower costs? If so it must be considered that utility costs in this country are considerably lower than elsewhere, for a number of reasons. So the concerns some seem to have (feel free to correct me if I'm putting words in your mouth) about high prices seems unfounded.

I would differ from Polnut in saying that this is a matter of private enterprise vs. nationalization. Unless we are to simply acquiesce to the PPT's view of things on the matter, there hasn't really been a clear case laid out for the need for not just a move as sweeping and drastic as this, but any sort of new large-scale state intervention in the energy sector. Perhaps it is just me, but it would be better if we were to definitively establish the problems with the energy sector we want to address, determine if nationalisation is the best possible solution to those problems, and then we can discuss, if it is what we have to do, what form the plan would take. It's a matter of not putting the cart in front of the horse.

[Simfan34]

Simfan, the case HAS been made, you just don't accept it.

Let us assume I have a thick skull- that I am wholly to blame for not getting it. Let us take that as a given. I understand that the problems stated with the energy sector at present to be:

1. Prices are too high, possibly in part because of "price gouging by capital".

Now, my simple mind and me are at a loss here. How have we come to the conclusion that prices are too high? Compared to what? Elsewhere? Let me pull out a few easy-to-read (I assume) charts comparing international electric rates.







Now perhaps it's just me being daft, maybe I can't read graphs correctly, but it would seem that electric rates in this country are dramatically lower than all but a handful of countries. Even in New York, people freaked out when the Con Ed rate spiked to 29.13 cents (that's 31.25 Australian cents, for the first chart). On a good day that might be around 20-22 cents. So I'm still left wondering by what metric that electric prices are too high.

2. It is a necessity that we achieve the lowest possible prices for energy due to its crucial role in industry. The existence of profits precludes this from happening.

I'm left wondering if my economics professors (not to mention textbook authors) were economic
illiterates, because as far as my "education" would lead me to conclude this is nonsensical. As I already pointed out (I assume incorrectly?), electric rates in this country are lower than in all but a handful of countries. As I pointed out before, electric utilities are getting very modest net profits in the range of 6-8%.

This is not "profit gouging", by any standard. Nationalisation and the elimination of profits would give us, at the most optimistic of guesses, and not factoring the explosion of costs that nationalisation would bring, a 4% decrease in rates. Are you telling me all this is necessary just to a shave a few percentage points off our already low energy rates? That millions of The People are being kept out of work because energy rates are something like (and remember this is a very liberal estimate) 5% higher than they would otherwise be? I find that completely absurd, but then again, as I said, we are assuming I am stupid.

Now, because I am so dull, I will take the inherent evil of profits as a given despite my inclination, certainly idiocy, to believe in no such thing. But, as Presidents  Duke and Polnut have been saying, profits are necessary, at the very minimum, to fund future capital projects, to build cash reserves to fund potentially unforeseen expenditures or otherwise cover losses, and to maintain general financial health. So they would be a "necessary evil."

3. A lot of poor people have difficulty affording fuel and electricity.

This is true, even I can tell you. But then this goes on to the second question we have to answer, what is the best way to address this particular problem?

4. Energy must be owned by the public and not the private sector.

I am far, far too unintelligent and lack the intellectual capacity to comprehend this. It is like trying to explain new research in quantum mechanics to a farmhand. I am simply far too ignorant to even begin thinking about how I might try to ever possibly understand.

I'm sorry for the tone here, but you have insisted I refuse to "accept" the case that has supposedly been made for whatever reason, when I don't see any such thing, much less a compelling one. You've acted as if the reason is so obvious that I would really have to either be willfully ignorant or downright stupid to not see it. This is the question that needs answering first and foremost, before we squabble about the structure or operation of a hypothetical state-owned energy utility.

What we are now doing is akin to discussing the particulars of engineering a large suspension bridge across a river, when we haven't ascertained not just if a suspension bridge is the type best suited to crossing the river when it could, for all we know, be shallow, but also if the river even exists at all. Let's figure out if there's a river first before debating the merits of the suspension bridge.

[Simfan34]

Let ask one more time. Why is this necessary? To tap into the profit pool? I have said there is no deep profit pool. Rates are pretty low already. It's not as if we're suffering from high rates and need relief.

Or is it because, as you said, "this is a resource that should belong to the citizens, not a corporation"? If this is for purely ideological reasons, an opposition to private ownership, then let's stop beating around the bush (sans TNF, who isn't) and make that clear. I can't really counter that, so if that's how you all feel then let's stop dancing around trying to lower costs, increase usage of renewable energy, or anything like that, and just be open about it.

[Simfan34]

Who would lend us the money the money, anyway?  Send me to Beijing to ask the PBOC if you'd like, but $2 trillion or anything near that doesn't just come out of thin air.

[Simfan34]

One might think the opinions of no less than three former Presidents would count for something.