Many of us can get a little misty eyed when talking about the free market, but what is "the market"? To quote Milton Friedman, “The most important central fact about a free market is that no exchange takes place unless both parties benefit.” Is that what the market looks like in 2021?
Supporters of free markets like to think of a free and open competition of ideas and products and we, as consumers, pick winners and losers. Like when the VHS format defeated Betamax. I’m sorry, for younger readers VHS was how we watched movies before DVDs. Sorry again, DVDs were how we watched movies before streaming…oh, never mind.
The point is that there was a market battle of sorts between two competing formats, VHS and Betamax. Most people felt that Betamax delivered better quality while VHS was cheaper. The market, the people, decided that cheaper was better and VHS won. That is what a free market does.
A recent column by Rob Port got me thinking a lot about the market. The column focused on a fascinating exchange between PSC Commissioner Julie Fedorchak and Lanny Nickell from the Southwest Power Pool. Space does not allow me to reset the context here so go to that article if interested. Fedorchak was asking how regional electric grid operators are ensuring grid stability as more and more renewables are added to the system and baseload generation, such as coal, is reduced. Nickell’s response was that regional grid operators have not assessed a prudent generation mix and said, “So far, it’s entirely dependent on the market to provide generation.”
The market. In this context the market are the utilities that are making the decisions to rely on wind and solar and reduce baseload generation. The utilities say that they are simply following the wishes and demands of their customers who are driving up demand for electricity from renewables. If true that would be a functioning market.
However, what is missing from the discussion is incentive, the money, from government that subsidizes renewables far more than traditional energy sources. The government’s heavy thumb on the scale means that we are not talking about a free market.
What about consumers? Are consumers really pushing for electricity from renewables? Well, an article this week from the Washington Times on a poll by the Competitive Enterprise Institute stated that one-third of Americans are unwilling to spend $1 per month to fight climate change. The poll found that 6% said they would be willing to spend $11 to $20 a month.
It does not look like the market is driving the push to renewables, there must be some other factors at play. The government’s role in picking winners and losers and leaving the consumers to suffer the consequences must be questioned.
To quote Ronald Reagan: “We who live in free market societies believe that growth and prosperity, and ultimately human fulfillment are created from the bottom up, not the government down.”
Grande represented the 41st District in the N.D. Legislature from 1996 to 2014. She is CEO of the Roughrider Policy Center, an "innovation over regulation" think tank. She is a wife, mom, grandma, lover of life and Jesus. Opinions are solely her own.
This column does not necessarily reflect the opinion of The Forum's editorial board nor Forum ownership.