Quote from: JA37 on December 19, 2011, 03:51:10 PM

Interesting that you think that. That's not my experience. You charge what your competitors charge, more or less, depending on how you position yourself. Lower cost to provide means more profit, not lower consumer cost.

The primary reason lower cost to provide means more profit is because it enables you to sell at a lower price and therefore generate a higher volume. Unless you have a very atypical situation, costs will be roughly comparable across competitors, so a lower cost for one company to produce will mean a lower cost for their competitors as well. Every restaurant charges less for hamburger than steak because every restaurant can produce a hamburger for less than a steak. You're treating the exception as if it were the rule.

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Your prices are set by the state? Really? Where do you live? I get to choose which company should exploit me, and they set their prices according to "free market principles" meaning that they collude to skin us all.

I live in California where State law requires nonsensical electrical pricing. You can read more about it here: http://www.pge.com/myhome/myaccount/rateinfo/ and here http://www.pge.com/myhome/myaccount/charges/

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They probably would operate at a loss if the prices weren't set by the state. That's because power companies doesn't like competition. They have no incentive to allow this, and every reason to resist it. That doesn't mean that it's inefficient, it just means that power companies like profit.

It does mean it's inefficient. Power companies didn't drop from the heavens. They exist because they invested money to build and maintain transmission facilities. This investment was made only because they expected a profit from those investments.

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In general people end up with money because they have money. If not forced, centralized redistribution (aka taxation) is the way, then what is? How do you level the playing field and make everybody reach their full potential? Being born poor is having the deck stacked against you, some overcome that, but most don't.

You seem to think that you can somehow make the right decisions if only you had the power. You *can't*. The information needed to make the right decisions simply doesn't exist in one place like that.

You need incentives because the only thing people really respond to are incentives.. If you take away the handicap of being born poor, you take away the incentive not to let your children be born into poverty. Being born without musical talent is having the deck stacked against you too, but leveling the playing field would mean giving music lessons to those with the least natural talent.

You're trying to push a ball uphill. You've stacked the deck so that all the incentives work against the direction you're trying to go. You want excellence, but then you reward excellence and mediocrity the same with a level playing field. You want to find the big rocks and push on them until they're at the top. And you insist on starting each ball at the bottom. It just won't work.

What you need to do is roll the balls downhill. Align incentives so that things go in the direction you want them to go. Fortunately, nature pretty much does this automatically so long as you stay out of its way. The main thing you have to fix is broken incentives -- essentially cheating. You don't have to make the world fair, just the system.

The solution is to become so rich and prosperous such that our problems continue to rapidly become irrelevant and forgotten, joining the shortage of whale oil and streets filled with manure.