Below are links to materials from the competition, regulation and privatisation session allowing, as with similar threads, for views on the topics and contents of the session to be gathered together.
A very central theme of the presentations and discussions was how reform might stimulate growth and thus reduce the costs of austerity.
Part of Doug Andrew’s presentation on governance is related to the privatisation thread already on the blog here. And, as regulated firms engage in investment, Colm McCarthy’s presentation on investment here could be read alongside some of the presentations from this session.
Although there are no slides from John Fingleton’s talk on competition, there is is a link to a closely-related paper, and you may, in any case, listen to the podcast of his (impassioned) speech, which is to be found from about 24.00 minutes into the recording.
Chair: Cathal Guiomard (CAR)
Richard Tol (Sussex)
Energy Policy and Economic Growth
John Fingleton (UK OFT)
Economic Growth – How Can Competition Policy Help?
No slides but related paper here
Doug Andrew (consultant, ex-airport regulator)
Ownership, Governance and Reform
6 replies on “Competition, Regulation & Privatisation session from Friday’s conference”
I agree with your Denmark / Wind remarks – with Denmark the highest price electricity followed by Germany today.
It seems a high capital cost , low or even negative real return operation.
But Utilities make money from scarcity , not gluts.
Do you agree Nuclear needs state backing because of its glut properties after the high capital input phase ?
So what happens with State Nukes ?
The Goverment spends money rather then credit – this causes a contraction of credit and therefore consumer goods and energy demand during the construction phase.
When the Nuke goes critical and online it is therefore exposed to less demand because of this – then it introduces much more cheap electricity into the now stagnant system.
A classic glut – that would bankrupt a private company.
A nation state CB would however print base money to bail out the apparent state sponsored malinvestment – once this new money flows into a economy with a higher energy density it would not loose long term value and indeed gain value over time.
Private companies therefore cannot make any money from Nuke construction & initial operation as the energy wealth is externalised into the wider economy.
They can only make money after they have been operational in a more mature economy – they can then rundown the capital asset over decades and express a profit on their books.
Gas has different dynamics because of its mainly lower initial capital cost – therefore less money is extracted from peoples consumption at first.
So private companies can begin to make money from gas construction & operation much more quickly and start supplying a apparently growing wealth base withen society.
As the gas price rises it can charge higher & higher prices as depletion takes its toll – then you get a eventual collapse of demand as the economy collapses.
NG is perhaps the most important energy building block for modern market heavily leveraged credit states although I am not fully up to speed with LPG energy dynamics.
While the Nuclear Industry needs nation states to remain in constant replacement production – with the nuke stations now in operation a legacy of the 60s & 70s ideology.
Both energy systems need very different monetory systems to operate effectivally.
Colm McCarthy ………. shorter summary.
Concrete = capital spending ……… we have enough concrete , therefore enough capital spending……….
Colm – theres more to capital spending then laying Concrete.
Its a typical narrow post war Irish view I guess given our role repairing Britain’s cities.
The cars may arrive more quickly to our cities but they are not much good if they drain much of our collective money supply.
The Horse outside is a better option – as at least I might have a few quid for a Pint or two.
Anyway I don’t think the man understands how the car really became the symbol of 20th century progress.
It was quite simple really – in America there was a huge oil glut – something / anything was used to consume this energy as quickly as possible , otherwise most of the oil fields would not have been profitable.
Classic consumption capitalism – cars were never really a capital good as they were never expected to pay for themselves – they were a lifestyle choice.
It follows that the roads used to carry these consumer items were in the main not capital goods either.
If or when we reach production peak your $ centric economic beliefs will be turned on its head.
With ironically the $ the last man standing if Europe continues with its present austerity international oil transfer operation rather then final settlement monetory operations.
I’ve listened to the podcast, followed the slide packs (and read John Fingleton’s background paper) and, while I realise it may not have been the objective of the event, I see very little that would be any use to a policy-maker tasked with devising ways to implement the structural reform agenda in the EU/IMF MoU, to a Member of an Oireachtas Cttee dealing with these issues or to an interested citizen.
I know it’s all good stuff – there is no crock of gold at the end of the green rainbow in terms of economic added value or employment, Ireland should keep energy prices low and the Minister is conflicted when a problem in the energy sector has to be resolved (Richard Tol); the Government should tackle barriers to competition across the entire economy using genuinely independent institutions, policy design in this area should be open and transparent to limit the behind-the-scenes influence of vested interests and competition policy should be enforced in a way that would deter detriments to the public interest (John Fingleton); there are all sorts of compromises and trade-offs that need to be considered when looking at various mixes of state-owned enterprises and private sector participation and it is difficult to keep the focus on efficiency when government is under huge fiscal pressure (Doug Andrew) – but where’s the beef?
To the perfectly legitimate questions: what should we do specifically about the ESB or the other semi-states? How should NewERA be structured and financed? How, and in what way, should we change existing economic regulation? How should Irish Water be financed? How should we define and enforce competition policy? etc..there are no answers.
I’ve had a stab here on what might be done with the energy semi-states:
and here on how the problem Richard coyly described at the end of his presentation might be resolved:
But there seems to be no interest in engaging on these issues.
It’s far more fun to rant about the Fourth Reich that Chancellor Merkel, an impeccable democrat, is seeking to foist on the EU:
Positive write up of the Coffey Construction , Cork Jazz Festival weekend construction……………….from Rail Engineer mag.
Rail does require mass concrete I guess.
What have the Romans ever done for us ?
This post focuses directly on the non-banking structural reform elements of the EU/IMF MoU which, though cobbled together in haste and under duress, were intended to counter-act the economic growth sapping impact of the necessary fiscal adjustment.
It is highly significant that it has attracted just four comment; one from me and three from the Dork which seem to come from a galaxy long ago and very far away.
For me, this suggests two possibilities. One is that, at both the official (and academic) level and among the commenting class generally, these proposed reforms are viewed simply as an optical illusion with no substance or import. The second is that they are the subject of intense debate and conflict behind the scenes and that those involved and those who have some knowledge of what is going on are either unwilling to engage in debate or believe they are prevented from doing so because of the political sensitivity of these issues.
I strongly suspect it is the latter. And the latest NESC report – almost 120 pages long – which purportedly focuses on ‘economic recovery’ and yet fails to address these structural reforms in any meaningful way provides some very convincing evidence.
But it is just one more damning piece of evidence that parliamentary democracy has long since ceased to function in this country. If a statutorily established forum, comprised of senior representatives of the key competing and conflicting economic interests in the country engaging with senior representatives of the government-machine and competent and knowledgeable academics, cannot bring itself to address these issues in a comprehensive and effective manner then the public policy space has been totally foreclosed to the advantage of government (and the special interests able to influence it behind the scenes) and to the detriment of the public interest.
And, yes, these reports are laid before the Houses of the Oireachtas, but what is the point when there is absolutely nothing of substance in them for the people’s elected representatives to consider?
How long does Government – and the many who are complicit – think they will be able to sustain this optical illusion?
“The debate is distorted by accounting errors
Jobs are created in alternative energy
Jobs are destroyed in conventional energy
Dearer energy destroys jobs”
Funny how an economist like Mr. Tol only ‘discovers’ this when casting about for reasons in lobbying against a new industry (and for the interests of the petrochemical giants, the enormous subsidy of which goes curiously unmentioned, again, despite many people here pointing it out to him).