The grasshopper needs a bailout
Today's Financial News - Posted February 24, 2009
Our elected officials are doing all they can to increase regulations and government dependency. Citizens in one state are cursing the action, while folks in another have no idea what is about to happen.
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): As the nation’s economy digs itself further and further into a nasty, painful recession, the knee-jerk reaction to call for a bigger government and increased regulation becomes increasingly prominent.
Over the last six months, we have seen all sorts of new regulations and government programs. In just the last four weeks, we have seen so much regulatory action it appears Obama has some sort of magical machine pumping out executive orders.
Instead of looking at the latest financial regulations or programs designed to “help” Americans, let’s look at one of the nation’s past attempts at regulation. It may give us a glimpse into the future.
You don’t want to know
If you live in one of the nation’s countless regions with soaring electricity prices, you already know what I am talking about. After years of strict industry regulation, state governments have been removing rate caps and letting the free market dictate prices.
After years of being artificially held back, you can imagine what prices are doing. All across the country, homeowners are opening their monthly bills and getting hit by an extra zero on the end of the amount due.
Here in Maryland, the Baltimore Sun headline reads, “Customers howl as utility bills skyrocket.”
Homeowners are searching for answers to why their monthly bills are up by as much as double or even triple over previous monthly figure. Power providers say it is because of increased demand and long-term contracts. Customers say it is price gouging. And politicians, of course, swear they are going to fix the mess.
Back home in Pennsylvania, the state is preparing (or should I say bracing?) for the free market. One local power provider that has been stuck under the reign of rate caps says customers should brace for hikes of more than 25%, while it quietly says the increase could be much higher.
After years of artificially low prices, homeowners are now forced to pay the difference. Of course, few folks used their savings to prepare for the day when their electric bills would eventually surge. Now they are crying for help.
The grasshopper gets a bailout
Lawmakers in Maryland are calling for re-regulation, working to push the problem onto the next generation. Of course homeowners will like the news. They’ll have more cash to spend at the state’s new casinos.
No matter where you look, politicians are meddling in the free market. It may reduce the pain now, but the lessons learned from utility regulation say we are only creating more trouble in the future.
But politicians will never call it trouble or pain. They call it job security.
Next Article: Investments lost? Just follow Wall Street to Pennsylvania Avenue
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