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Nearly all players in the US energy sector -- from utilities and independent power producers to regulators and government agencies -- agree that demand for electricity is intrinsically tied to economic growth. Evidence of such a link has certainly been seen during the post-2008 recession period; consumption has grown about one percent per year over the past three years. Assuming this modest one percent growth in electricity demand continues, US utilities will need to produce approximately 7.5 additional gigawatts (GW) per year to keep up with demand. Planned capacity additions between 2012 and 2015 currently add up to 52 GW, a number that far exceeds the country's needs.
Accenture believes, however, that this expected increase in capacity is overstated. Less than 30 percent of the planned 52 GW expansion is under construction today -- and just 10 GW or so of that is dedicated to baseload generation. Assuming that about 20 GW of new capacity (net of retirements) actually comes on line during this period, reserve margins of approximately 20 to 25 percent in 2011 are expected to decline to about 15 percent by 2014. And while a 15 percent across-the-board reserve margin would be acceptable, the erosion of reserves -- and the investments required to boost them to acceptable levels -- have varied significantly from one region to another. As a result, forecasts show that many markets, including Texas, California, the Upper Midwest and others can all potentially fall below minimum required reserve margin levels within the next years.
Building capacity in the face of unprecedented industry volatility
While power development has never been an easy business in the United States, three factors are now converging to create an even more complicated industry environment.
Uncertainty. "Uncertainty" is a common theme among all the possible power generating options today. Take coal power, for example. While global demand is escalating, stricter environmental regulations -- coupled with lower natural gas prices -- will likely make it difficult for coal power generators to sustain the economic viability they have enjoyed for decades. Additionally, the interest in renewable forms of energy and technological developments such as the introduction of plug-in hybrid vehicles may soon reshape demand curves.
Lack of investment incentives. Over the years, the industry has embraced different waves of construction policies and incentives that ensured a reliability of supply. More recently, the recession and its resulting loss in load have put reserve margins in a comfortable territory. As a result, companies have had few incentives to build new baseload generation capacity. With the average age of the current baseload fleet at 35 years, the United States desperately needs investment in new baseload generation. Yet, current market trends are not spurring much investment activity. And even if they were, today's wholesale markets could not support the investment and development of new generation.
Complexity. In the industry today, structural flaws inhibit the ability of a pure locational marginal price-based power market to send the long-term price signals that are necessary to support merchant baseload investment. Environmental legislation, supply security, renewable portfolio standards and demand side management are issues that make the resolution of these structural flaws even more difficult. That said, there are opportunities to inject true demand proxies (e.g. state participation in markets) or to provide state-sanctioned development backing so that long-term baseload generation equations adequately respond to issues of supply and demand.
The future of generation: Three scenarios
Amid the industry's volatility and uncertainty, executives are struggling with how to achieve long-term resource adequacy. Because of the complexity of the regulatory environment and differences in the electricity markets in each state, no single solution exists. Instead, the market is considering three distinct approaches:
"Laissez Faire" approach. In this scenario, as reserve margins decline, power prices would increase to the point of scarcity and attract new investments. New generation would be built until all economic rent was extracted and a new equilibrium point was reached. Short-term supply gaps would likely be filled by demand side management and new natural gas generation. Over the longer term, the expanded role of gas generation would drive up the market's "heat rate" and "spark spread" to create the scarcity pricing that is necessary to usher in the construction of new power plants.
There are two potentially significant problems with this approach. The first involves timing. It may take years for the market to institute the scarcity pricing needed to drive new investment. Also, developers and utilities face long construction lead times. Given that many are still not creditworthy enough to get financing, it is unlikely they would be able to secure the funding needed to build the capacity that is needed in the near term. The second involves public support. To create scarcity price signals, reserve margins may need to dip well below the acceptable levels for reliability. That would be unpalatable for consumers and regulators and could have repercussions on the overall US economy.
Capacity mechanism approach. In this scenario, capacity mechanisms based around an ideal target portfolio and reserve margin would be established by a central-planning entity such as a state regulator or Regional Transmission Organization, rather than by the market. Payments funded by the Load Serving Entities (and ultimately by the electric customers) would provide the long-term investments for new generation.
Setting capacity payments is not easy, since such payments are tied to the estimated cost of building new units that would meet reserve margin and target portfolio requirements. With considerable upward pressure on engineering, procurement and construction costs, as well as uncertainty about future environmental standards, these costs are difficult to estimate. Additionally, capacity payments are often too low to foster investment in new generation. This was the case in New England and for PJM Interconnection, where capacity markets were able to fund only the maintenance of existing generation. Other states, including Connecticut and New Jersey, are now developing new capacity instruments to encourage investments in new generation. This is welcome news. However, the lack of homogeneity across states may make the implementation of a true capacity market more complicated.
Re-regulation approach. This approach is based on the premise that some states -- discontented with the failure of deregulation to lower power prices -- would take steps to create a "re-regulated" environment. In such cases, individual utilities would need to demonstrate not only the need for investment in new power generation, but also a plan to recover investment costs.
Currently, Accenture does not believe that any fully deregulated state will actually turn back the clock on competition. However, in states where market transitions are less advanced, regulation might come back into favor. This seems to be happening in Virginia. In December 2007, the state's main utility, Dominion Virginia Power, floated a proposal to end rate caps and return to a cost-of-service based model that would allow the utility to build new generation. This was, in effect, an invitation for the state to embrace a regulated model, rather than relying on the newly formed capacity markets in PJM Interconnection to incentivize new generation.
Another possible outcome of re-regulation might be the creation of hybrid market models. Such models would develop new supply from a blend of utility and contracted merchant plants. The clear winners in these hybrid model scenarios would be the regulated utilities in the affected states, since the growth opportunities for merchants would be significantly reduced. The major problem with this approach is that new generation would be built based on the need and the ability of utilities to gain recovery of the investment; the incentives might encourage utilities to overbuild.
Accenture believes there will be a correction of existing generation prices before the next building cycle begins. Longer lead times, combined with higher costs associated with building new generating facilities, have led industry executives to revalue their existing plants. But the gap between the building and buying options is still wide enough to encourage asset transactions instead of new building, particularly when it comes to gas-related assets. When the gap between building and buying assets closes, new generation will be built.
Despite the possible scenarios outlined above, Accenture believes that new generation will be built under different regulatory compacts and using different market solutions. One thing, however, is certain: The industry is unlikely to put all its eggs in one basket. Ultimately, a mix of plant types will be pursued, including gas baseload, coal, (longer-term) nuclear, and renewables. The first wave of new plants will most likely be constructed by regulated utilities. For their part, unregulated generators will try to ride the wave of market heat rate and spark spread since they will be unwilling to commit to new construction without creditworthy, long-term off-take agreements.
For information on purchasing reprints of this article, contact sales. Copyright 2013 CyberTech, Inc.
The problem is protecting end customers from the realities of a free market. It is impossible under the present market schemes to justify building a significant new chunk of baseload generation until there is a proven market for at least about 80% of the plant's output, yet the grid goes down as soon as 1% of it's output is needed.
What's really needed is for groups like Accenture with access to all the decisionmakers to figure out a fix in the market designs to alleviate this one problem, then convince those decisionmakers.
Michael Keller 8.22.12
Seems to me the need for power and the available fuel resources is essentially regional in nature. Under that scenario, the driving force should be state and local in nature, with the Federal government staying the hell out of the way.
With the advent of the efficient, rapidly built and low-cost combined-cycle plants, I believe there is considerable flexibility and latitude, particularly with relatively abundant supplies of natural gas.
In other words, there is no need to panic.
Thomas Lord 8.22.12
This problem was realized in the beginning of the last decade (I have articles on this website dating from 2003 indicating this future issue). The problem is that creating a "different regulatory compact" that blends risk mitigation through cost of service funding and incentive returns of a tradeable market are not a logical combination.
The question comes down to whethr the market structure can genereate a sustainable investment price signal - as currently structured, the answer for US electricity markts is no. Viable structures have been proposed but discarded as untenable.
One sure result - easy solutions will end up costing more than the are worth.
Ferdinand E. Banks 8.23.12
Let me put it this way. I believe that I published the first article in a 'learned journal' saying that electric deregulation was a crock. Later I went to Hong Kong to lecture to the high and mighty about the evils of deregulation, and while I was there the Southern California system and the lying deregulation lover Enron had their famous troubles. Still later I made a detailed study of deregulation in the US, and published a half dozen or dozen papers on the subject in which I claimed that electric deregulation has failed, or is failing, or will fail just about everywhere. I see no reason to change that.
Here in Sweden the industry people listened to ignorant academics say that deregulation will solve their problems. What electric deregulation did was to rob households such as mine. Industry people are now inclined to say that deregulation was crazy, and should be rescinded, but the dumb government is too dumb to figure out how to do that in an efficient way.
And Mr Lord, for Sweden an easy solution involving domestic assets is absolutely the optimal solution. What it will mean for e.g. Denmark and Germany who have or will have a crazy energy policy is something else, but please believe that I care absolutely nothing at all about their problems.
Harry Valentine 8.23.12
The future of generation may have to include long-distance transmission, as local generation may either be insufficient to meet local demand or be more costly than imported power. During periods of local economic downturns, power can be sold to alternative markets, including international markets.
We have a situation where Icelandic hydroelectric and geothermal power may be cheaper than some forms of domestically generated power in the UK and other nearby European markets. Hence the interest in installing an undersea power cable between Iceland and Scotland. There are advances occurring in buried cable and submerged cable HVDC power transmission, technologies that appear to be immune to solar flare activity.
With regard to regulation-free electric power, this may occur in isolated regions where low-cost local electric power may be possible, involving technologies such as small hydro, ocean current or ocean wave conversion Customers would be free to install solar panels and.or wind technologies on their properties.
Michael Keller 8.23.12
Just out of curiosity, where are these "fully de-regulated" states?
As far as I can determine, all states have regulations governing power production, transmission and distribution. Some may have more extensive regulations than others, but none are actually "de-regulated".
In all cases, the states are attempting to emulate a "free market" through various regulatory contrivances.
Considering the inherent monopolistic nature of electric utilities (which is completely unlike telecommunications), seems to me it is disingenuous to toss around the term "de-regulation" as that is simply not possible until such time as power can be provided to a user through any number of sources, with the user free to make a selection as they see fit. The restraint of only one set of incoming wires is difficult to overcome.
Len Gould 8.23.12
Micheal: Some may have more extensive regulations than others, but none are actually "de-regulated". < /Q> - Your proposal is either a straw-man argument, or you haven't thought things through. No market, including the NYSE, can operate without regulation, from SEC oversight ensuring accuracy in financial statements, to investigators monitoring the honesty of sales groups.
De-regulated of electricity markets means that there are no (or very few) authorities regulating the construction of new generation, eg. theoretically competing enterprises are free to build where and when they choose. Of course, as in any other market system, there must exist laws and regulations governing the operation of the market, and logically many other aspects of the grid system.
Len Gould 8.23.12
< Q>The restraint of only one set of incoming wires is difficult to overcome.< /Q> That's no problem at all. What's needed is removal of the restricting regulations on whom any customer may purchase from and whom may supply to the grid. With todays computer and communications systems into every customer site, the original reason these restrictions were put in place (transaction costs of dealing with short interval billing of millions of customers) has gone away, but the obsolete regulations remain.
Senior citizen, exactly 30 days younger than Saddam Hussin, finally realizes tjhat energypuluse accepts html.
Michael Keller 8.28.12
Len, You continue to miss the point. The electric utility industry is quite different than normal commerce because of the relatively few options available to the consumer. Until we have plentiful options, "de-regulation" is not possible; only some form of "re-regulation", regardless of what the consultants may say.
Perhaps when Tam Hunt and the lads get renewable energy down to a competitive price (and I suspect that will happen), then we can jettison the regulated structure that now exists. Until that happens, the monopolistic nature of private utilities needs to be reined-in.
Len Gould 8.29.12
Michael. The problem is integration of generation and distribution into single entities. The two should be split into a distribution monopoly by region, and several generation competitors none allowed to own any part of distribution or more than 33% of baselaod or peaking generation supplying any distribution entity. Transmission is owned independently or by generation and operated by an ISO. Generation entities as part of their contracts are responsible themselves to organize necessary transmission to fulfill their delivery contracts with severe penalties for failure to deliver. ISO is budgeted to purchase voltage stability and reserves. a) ISO's operations b) distribution regulated prices and c) generation's delivered energy on 15 min intervals) are billed directly to customers as separate items each month. c) is not normally itemized on bills, but showed as one line per supplier. itemization is available online or by purchasing a printout from the "market manager" (like or = ISO).
Requires very smart metering / pre-bidding contract computer system in order for the ISO to manage the grid. Each customer, one day in advance, purchases "options" to consume the energy they expect to need each 15 min interval following day for 50% of contracted delivery price from one or more specific suppliers. If consume exact amount of options (not expected), then pays other 50%. If consumes less, pays other 50% on only amount consumed, no rebate on unconsumed options. If consumes more, pays "top market price for that period" to ISO, who was required to organize additional supply to cover.
Resulting incentive is for customers to predict their consumption accurately in advance, and take whatever steps necessary to match actual consumption with predictions. All option bidding etc. is done automatically for each customer by a computer program embedded in their meter, which also has control of sheddable loads within the customer's premissis.
Michael Keller 8.30.12
Most folks haven't the time or inclination to "play-the-market". Further, the whole "smart meter" program is nothing but a Trojan Horse aimed at completing absolving the utilities from any risk, with dim witted politicians going along with the nefarious scheme because they irrationally think they are saving the planet.
Len Gould 8.30.12
Micheal. In this market system, it is the computer in the meter which "plays the market" for you, based on your past history and any hints you may (or may not) wish to give it, such as "Will be away on vacation from Saturday to next Saturday" or "Will have two houseguests from Sunday until Tuesday" or "I prefer you buy somewhat fewer options from now on, approximately 5% less (if for example you've just changed to a more efficient refrigerator)". Otherwise, no interaction is required, it simply projects consumption based on past records and weather forcasts and purchases your options for you.
Michael Keller 8.30.12
Len, Perhaps in the distant future the ability to "find" the lowest price for power will exist at the consumer level, but we have one hell of a ways to go. For example, the business of trades in the power market is fiendishly complex, with the ISO (Independent System Operator) methods mind numbing. I just do not see how that complexity can be simplified enough to ever reach the point where an effective "unfettered" market exists at the consumer level. Thus the need for strong regulation as a free market is likely to remain a mirage.
Len Gould 8.30.12
As far as this system being a Trojan Horse aimed at something, the main thing it is aimed at is smoothing out the load curve, reducing peak consumption and shifting it onto off-peak baseload units at far lower cost to everyone, by making people pay actual wholesale prices for each time interval during the day, and providing them the means to control sheddable loads (A/C units, refrigerators etc.) to their own great advantage.
Micheal, I am aware of how "fiendishly complex" utility markets get, as for several years I maintained and enhanced the wholasle billing software for a large regional gas utility here. Primary lesson I learned there was that the fiendish complexity was introduced by the sales staff, in efforts to outflank competitors by offering customized packages to each customer. No such opportunity will exist in this model.
Michael Keller 8.30.12
You just proved my point.
You advocate passing along outlandish wholesale prices created within a contrived market, with little or no relation between actual cost of generation and price charged the consumer. The utility has virtually no risk, which is my point. In a real marketplace, the consumer has many options, with the seller facing the possibility of losses as well as profit.
Again, deregulation is a complete misnomer and a cruel hoax being foisted on the consumer by consultants (and utilities) making money on the whole dishonest scam.
Len Gould 8.31.12
"You advocate passing along outlandish wholesale prices created within a contrived market, with little or no relation between actual cost of generation and price charged the consumer. " -- ?? Where did you get that? You clealy have not read the second article referenced above.
The whole purpose of this market is to allow ALL customers to purchase directly from suppliers, eliminating usless retailers and costly regulation, with large teams of lawyers spending years and millions on each rate case application.
Michael Keller 9.2.12
The Internet is a marvelous device. You can track real-time wholesale electricity prices in various parts of the country. Peak prices of several hundred dollars/megawatt-hour occur and that is nowhere near the actual cost. Contrivances at "nodal" points in the ISO computer models drive up prices.
Can traders buy and sell power in ISO markets. Sure. But that requires a lot of skill as well as time and those are commodities that consumers simply do not have. To be blunt, the idea of the consumer entering this complicated market is completely unrealistic.
"De-regulation" is a myth so stop trying to foist various pseudo free-market contrivances on the hapless power users. Regulate the utilities (or use municipal power where the users at least have some measure of influence).
PS I do not need to read your references - I have first-hand experience in the power business, including buying/selling/generating power.
As far as the regulatory process, the lawyers deliberately make it complicated (so they can make lots of money), with politicians mucking things up (to buy votes) while the utilities attempt to further strengthen their monopoly (to make more money). The hapless consumer is effectively the "odd-man-out" in the generally Kafkaesque theatrics.
The process does not, however, need to be particularly complicated if a Solomon-like approach is used. By that I mean, regulated utilities are not subject to much risk, so their returns on their invested capital would be market value (a few percent currently); fair-and-reasonable costs would be apportioned to all users, with those who use more paying more. Cost would be trued-up periodically.
Len Gould 9.3.12
"PS I do not need to read your references " -- Thank you, we all can now ignore your posts, and will.
Michael Keller 9.3.12
I went back and read your references. Merely confirms the logic flaw in your comments. The average consumer simply does not have the time or capacity to deal with what you propose nor do we have the computer programs to routinely crunch the sophistication that must be imbedded in the models. The required combinations and permutations are overwhelming for the mathematical modeling.
However, and most fundamental, the assumption that the modeling can properly emulate a free and unfettered is incorrect. The supply of energy and delivery of the power is deeply constrained by all manner of impediments that severely limit the consumers options. That is why the whole "deregulation" effort is inherently grossly unfair to the end user.
Len Gould 9.4.12
Micheal, i assume your concern with ``the sophistication that must be imbedded in the models`` refers to the models the ISO uses to manage the transmission network. This model should only affect the ``load by geographic customer pool`` input to any such models, and the only change it would make is to provide accurate predictions of those loads instead of estimates. Otherwise the same models as presently used should work just as well. Otherwise, in this system the ISO has just the same authority to refuse generation inputs which might cause load problems for transmission, and it would be generation`s problem to resolve those (normally by arranging to purchase replacement supply from a nearer local generation to substitute for any supply refused by the ISO). Don`t forget the included rule change, that every supplier to any market is responsible themselves for pre-arranging any needed transmission to meet their delivery contracts, and for paying penalties for failing to deliver any contract, including events where the ISO must refuse to transmit their contracts. It moves responsibility including financial responsibilty for transmission from the ISO to the private generation companies, who will clearly need to become more sophisticated, agreed.
Regarding ``The average consumer simply does not have the time or capacity to deal with what you propose``, the basic smart meter will be provided with an included market interaction program which will be able to get for any customer an average market price with absolutely no interaction which will be no worse than the prices they woulod pay under full regulation. Then if a customer wishes to learn to interact, or to pay a service provider to do so for them, or to invest in smart appliances which can load shed at market peaks etc., then the added benefits of their interactions will be available to them individually for doing so, rather than just being averaged across all customers as under full regulation, a system which fails to reward properly the smart customers and therefore fails to get any of the many available efficiencies.
I agree that any deregulation model which has been tried so far has been ``inherintly grossly unfair``, because it does not properly reward those customers who try to take steps to benefit the grid system, such as offering emergency load shedding, peak load shaving, load shifing etc. etc. This model addresses those issues, as well as the freeloader problem.
William Gilbert 9.4.12
As a long time republican it hurts me to write this. I have been in the electric industry for about 20 years and have lived all over the US. Since electricity is now a necessity in everyday life I am for regulating the entire country at the federal level. In fact, I am actually for the US basically "buying out" all generators and distribution and making all the employees government employees. Establish a code of federal regulations that allows the government to make a 10% profit annually that is used to rebuild the electric infrastructure and replace aging baseload with new plants (nuclear, clean coal, natural gas) and develop sustainable renewables. Take the entire private sector and wall street out of the equation. Also it could levelize rates so the people in NY and CA pay the same as those in WY and NE. Instead of 20 cents a KW and 3.5 cents a KW they would all pay 10 cents a KW.
Michael Keller 9.4.12
With all due respect, the bungling, inept, bloated and grossly inefficient Federal government should have minimal involvement. Rather, regional (as in the states) are much better at meeting the needs of their citizens in energy markets because they are far more accountable than far-off oxygen wasting bureaucrats. In addition, the needed resources vary quite a bit from region to region.
William Gilbert 9.4.12
I understand the cost difference across the nation, but that is set up by these same regional governments. The economy of scale for one organization running everything fuel to light bulb in the electric utility game would be incredible. And many of these regional (and private companies) are even more inept then the feds....
Michael Keller 9.4.12
As far as levelized electricity cost, if Californians want to waste money on renewable energy and pay thru the nose, "no problemo". Ditto for New York and their prohibition on "fracking" for abundant and low-cost natural gas.
However, these folks should reap what they sew and not heist energy from neighboring states whose citizens are willing to take actions to insure the use of low-cost energy created in their own states.
At least those in private industry when someone isn't doing the job, you can let them go. That is not the case with Federal employees.
Tom McNevin 9.5.12
In addition to everything else that is confusing about this, let me draw attention to some actual numbers indicative of electric demand in the PJM Mid Atlantic (PJM-MA) region whose behavior during the Ozone Season (May-September) I study, (fossil-fueled power generation emits nitrogen oxides which are a precursor of low level ozone formation). The authors state "consumption has grown about one percent per year over the past three years." Measured from 2000, this is exactly what you see in total load through 2011 in the PJM-MA region. Again, this is for the Ozone Season, which contains the days of both maximum peak and maximum total load. However, since 2005, total load has declined from year to year, every year except for the rebound from the economically depressed, cold summer of 2009. In the gruesomely hot summer of 2010, load finally rose back to the level of 2005, in fact exceeding it by 0.1%. The improved economy in 2010 presumably contributed to this as well. Overall however from 2005 to 2011 total load declined at an annual rate of 0.44%. During this same period, peak loads rose at a rate of 0.7%, while cooling season degree-days in the region, which are indicative of air conditioning load, rose about 0.5% annually. Interestingly, the all-time record peak loads occurred in August of 2006.
What's going on here? While the state of the economy along with the seasonal climate are obvious factors relating to electric demand, other factors are clearly involved as well. It would seem that energy efficiency is slowly having an impact. All of those millions of CFLs installed, along with the steady turnover of major appliances (washer, driers, heat pumps, etc.) to newer higher efficiency models seem to be having an effect. Behind-the-meter generation and/or net metering also contributes. NJ currently has over 850 MW of installed solar PV capacity. Demand Response programs are also weighing in, having increased dramatically in recent years. These programs in particular are having an impact on peak loads. The all-time record of from August 2006 would have toppled in July 2011 if not for the reduction of some 2,500 MW of Demand Response. As a result that day, which saw 108° in Newark NJ, came in as the 4th highest peak load.
Len Gould 9.5.12
``(and private companies) are even more inept then the feds.... `` Good lord, William. Don`t you know you`re not supposed to state such truths so boldly with neo-cons around, you`ll give them an anurism.
Michael Keller 9.5.12
Solar in New Jersey is a cruel economic joke. Try looking at a map of the incidence of solar energy and the cost of the delivered energy. Complete waste of money.
As far as energy efficiency is concerned, that makes good sense from a financial standpoint (emissions as well). The dopes in New Jersey would have been better off using the solar/renewable subsidies for simple things like more insulation in folks house, programmable thermostats, more efficient lighting and more efficient HVAC equipment (as the old stuff wears out), etc.
There is no way in hell the federal government will ever be efficient. They use other people's money, are heavily unionized and have virtually no skin in the game other than to expand the bureaucracy. That is why government needs to be restrained and provide only the essentials prescribed by the constitution.
Len Gould 9.6.12
Michael. In contradiction to your last paragraph I might offer the comparison (governments v.s. private business) of health insurance in Canada (provincial government operated, largely federally financed) v.s. the US (private insurance). In Canada, 10.9% of GDP provides universal coverage with better outcomes in pretty much every category than the US which spends 16.2% of GDP. In things which naturally should be monopolies and equally provided, such as health insurance, primary and secondary education, regulation of markets, defence and war, management of environment, etc., governments are by far the more efficient and better operated providers.
Canada v.s. US Maternal mortality rate:
12 deaths/100,000 live births v.s. 21 deaths/100,000
Infant mortality rate:
4.85 deaths/1,000 live births v.s. 5.98 deaths/1,000 live births
Life expectancy at birth:
81.48 years v.s. 78.49 years
Michael Keller 9.6.12
Health care? That no doubt explains the large numbers of Canadians who come to the US for health care. Further, health care is not a monopoly in the sense that only the government can provide care. Private industry is vastly better at it because of competition. The vast majority of advances in medicine come from private industry, not the government. The reason for that is quite simple: profit motive.
Education? No doubt that explains the abysmal state of government provided education in the US. the absence of competition has doomed tens of thousands of inner city kids.
The US military is the best in the world because our enemies are trying to kill us, not because of the innate skills of bureaucrats in Washington D.C. Ever stop to consider who actually designs and build the weapon systems? It is not the bureaucrats.
As I pointed out earlier, the US Constitution defines government's role. That is what the politicians and bureaucrats should follow. Further, all powers not explicitly enumerated in the constitution as the responsibility of the Federal government belong to people, state and local governments.
Len Gould 9.6.12
Michael. ``health care is not a monopoly in the sense that only the government can provide care. Private industry is vastly better at it because of competition.`` Typical for determined ultra-rightists, you misread me. I proposed govt. monopoly of health care INSURANCE not health care delivery. Delivery of health care in Canada is done by competitive private doctors, usually organizing themselves into partners in clinics.
It is the absence of education funding in the US inner cities which has doomed generations of unfortunate inner city kids to having no opportunity in society. In Canada the public education system works quite well, without the usless and WASTEFULL overheads of private business. (determining and enforcing rights of access, bidding for contracts, persuading customers, etc, etc,)
The US constitution, though an admirable document for its time, is over 200 years out of date, and has included some dismally failed amendments since. If Washington, Franklin, Jefferson lived today, they would clearly not write the same document.
Michael Keller 9.6.12
A government monopoly on health insurance? Why? I fail to see how that could make insurance cheaper, only less responsive and inefficient owing to no competition.
The inner city schools generally spend much more money per student than their suburban counterparts, yet achieve inferior results. Throwing more money at the problem is not the solution. What is lacking is competition and the ability of parents to get their kids out of schools who fail their only mission in life (educate the children). The unions are a major cause of the problems, in large part because it is essentially impossible to get rid of the incompetent.
As far as the republic's founding fathers are concerned, you are in no position know what they would or would not do. Their philosophy, however, is well known and written down: the U.S. Constitution. The people of this country (not foreigners) will collectively decide how the document is to be amended from time-to-time.
Len Gould 9.6.12
Micheal. You fail to see how govt. monopoly on health insurance can provide lower cost, when I just provided same with proof between Canada 10.9% GDP with universal coverage (including I`m betting more chronically ill poor US citizens migrating to Canada, of whom I know several personally, v.s. Canadians going to US for healthcare, of whom I`ve only heard of one wealthy provincial premier) and US at 16.2% GDP and a serious percentage of population with no health insurance, above. I have met a wealthy Canadian CFO of a large corporation who bragged to me about how much his company valued him by relating how, when he was visiting Florida and suffered heart problems, his company sent the private jet down to collect him immediately back to Toronto to aviod those absolutely scandalous healthcare costs.
The only reason I have these discussions with you guys is because your financial elites insist on exporting that broken philosophy worldwide, including attempts here. Keep it there, I`ll say no more.
You are clearly not open to any persuasion. I`m out.