Letter 2 America for November 19, 2013

Dear America,

Embedded deep in the folds of the venerable old New York Times, there appeared an eminently modern article last Saturday.  Its import was obscured by its placement on page four of the business section, but its significance was undiminished by that obscurity.  The article was about Arizona imposing a fee on solar energy providers...not those who provide such energy on a large scale, but on those who place solar panels on their roof tops and send the surfeit of what they produce back through the electrical grid, thus running their electric meters backwards.  It seems that at least twenty states have laws and regulations that permit such practices, but the electric company in Arizona at least complained about it.  Their plaint was that such small scale solar energy producers take advantage of the infrastructure of "the grid" for when they cannot produce what they need, but they pay less for it than other consumers, though I cannot fathom the reasoning behind the claim.  First, the electric companies sell the power the small scale producers don't use for themselves to other consumers at the going rate, and thus the transaction between the two produces a net zero on the company's balance sheet.  But second, the fact that the households that produce some of their own power don't burden the grid when they are doing so should redound to their credit in direct proportion to the diminished amount that they pay for it.  But the reason for my attribution of such importance to the article is that I have long believed that the future of energy production is not in better production and use of fossil fuels or massive wind farms in the mid-west...not in large scale energy production but in the production by every structure of some or all of the energy it needs through use of renewable source technology--solar panels, wind mills, potential energy harvesting, geo-thermal wells and who knows what else will develop--on a small scale.  Thus, this trend toward those who provide for themselves and conserve paying the traditional providers for the fact that their business is thereby diminished is a devious way for the power companies to continue to profit from what has been until now a captive market, even when it is captive no longer.  It just isn't fair, and it isn't really reflective of the free market by which corporate America, of which they are a major part, claims to live and die.  If we use too much of anything, we have to pay more because the market favors the producer over the consumer.  But if we use less...we also have to pay more because the market favors the consumer over the producer.  How can it work both ways for the producer?

The formula seems to be the same in every business: the old heads I win, tails you lose formula.  The petroleum industry claimed that prices were rising because of a shortfall in the amount of oil produced.  The market favored the producers because consumers wanted more than was available.  But now with the advent of fracking and horizontal drilling into shale deposits, petroleum is flowing like water, and while the price of gasoline has fallen over the past few months, no one seriously believes that such will continue to be the trend.  And here in the Hartford, Connecticut area we have a water producer that is a municipal utility called MDC, which stands for the Metropolitan District Commission.  The MDC was chartered by a group of towns about eighty five years ago under an enabling statute, but also by statute, the MDC is unregulated; it has no oversight whatsoever.  So, when the efforts at conservation of the users of the water supply here reduced consumption over the course of about ten years by almost twenty percent, the MDC was left with supply in excess of what it could sell.  The solution to the resulting cash flow problem was to raise rates on some of its customers--those who live in towns it supplies outside the boundaries of its chartering towns--by imposing surcharges that more than doubled their bills.  In essence then, we have to pay more because the water that the MDC has too much of isn't being used fast enough, not because their isn't enough to go around.  It's just more of the same perverse math.  Instead of divesting itself of the supply it can't use, our MDC wants us to pay for it to sit there...unused.  I say that if the law of supply and demand no longer relates to, well, supply and demand, we ought to acknowledge that there is a new rule that has taken its place.  Maybe we could call it the corporate oligarchy rule, or the you can't win rule.  Or maybe we should just call it unconstrained greed.  It's kind of like democracy.  At one time it meant that everyone gets to vote and then the winners of the majority of those votes went to Washington, D.C. and acted as our surrogates: a republic.  But then came the filibuster, and in the House of Representatives "Regular Order," and parliamentary procedure became more important that who has the majority of the votes.  By simply not voting on things, those things could be prevented...and prevented by the very people we sent to Washington to vote on them and thus make them happen.

What it comes to is that everything has been turned upside down.  Power is flowing up to the very few from us, the very many, and the very few are using it for their own enrichment at our expense.  That's why we need a new name for the rule...something other than supply and demand or the free market, or democracy.  What I suggest is this.  Let's just call it what it is.  In this country, and probably all over the world, the few who benefit from the toil and travail of the many are in control and they are getting rich of all of the rest of us.  The tail is wagging the dog, so let's just call it what it is.  From now on, let's just acknowledge that it isn't market forces that create price trends.  It's our tail ends.  From now on, let's just call it the tail rule that is resulting in the vast majority of us taking it in the...well, you get the idea.  It's kind of a double entendre, but I like it.

Your friend,

Mike