Bill Richardson: Market Democrat

David Weigel | May 17, 2007

Just saw New Mexico Gov. Bill Richardson, the Democrats' dark horse 2008 candidate, speak at a New America Foundation event on energy efficiency. The theme of the speech wasn't surprising - Richardson wants to reduce American oil consumption by "6, 8, or even 10" million barrels of oil per day by 2020. He wants to do it without more drilling in the Arctic or the Gulf of Mexico. But his strategy for getting there was the use the presidency to set mandates and let markets - especially the energy industry - do the rest. "I'm a market-oriented Democrat. I want to set mandates and let the market respond." And this is a "bedrock principle that is not open to negotiation."

Three bits I liked: Richardson attacked Congress for whiffing on energy and transportation issues. "What happens every year? We get these pork-bloated highway bills that fund inefficient projects and don't solve our transportation problems." Also, a shocking lack of hysteria about the energy industry: "I know people love to hate the oil companies, but I want to invite them to become energy companies." And a knock at Jimmy Carter: "When I say 'we'll need to make some sacrifices," I'm not saying 'put on a sweater' or 'turn the heat down.'"

In a super-brief Q&A session, Richardson fielded a question about whether regulation was inherently anti-free market. I've uploaded his answer here as an MP3.

Comments

Grotius|5.17.07 @ 12:01PM|#

David Weigel,

Three bits I liked: Richardson attacked Congress for whiffing on energy and transportation issues. "What happens every year? We get these pork-bloated highway bills that fund inefficient projects and don't solve our transportation problems." ... And a knock at Jimmy Carter: "When I say 'we'll need to make some sacrifices," I'm not saying 'put on a sweater' or 'turn the heat down.'"

If I recall correctly, one of the things that got Carter in trouble with Congress was Carter's efforts to deal with pork-barrel water projects.

|5.17.07 @ 12:02PM|#

Energy deregulation worked really well in California, didn't it? We should try the market-based approach across the country. Surely most Americans have forgotten Enron by now.

Geez, it's a good thing that idiot has no chance in the election.

Grotius|5.17.07 @ 12:07PM|#

Dan T.,

Were the energy markets in California really deregulated?

db|5.17.07 @ 12:09PM|#

Yay, Dan T.! Just keep not mentioning that "deregulation" in California was designed to fail by the politicians who codified it so that its failure would likely cement government's grasp on the industy. It was "deregulated" just enough to let generating companies be responsible for the upkeep of thei equipment, but not enough to let them charge sufficient rates to actually pay for maintenance and new plant construction.

|5.17.07 @ 12:13PM|#

Deregulation: To allow previously regulated companies to charge whatever prices they like they while enacting new regulations to cement their government protected monopoly.

Electricity Choice: Do you want electricity or not?

|5.17.07 @ 12:16PM|#

Dan T: No doubt that California's energy policy was a failure. Of course, many of the states, and most of the highly economically developed states, are fooling around with energy markets. I can't call it "deregulation" because it is nothing of the sort. It's like shackling a man's arms and legs, then tethering him to a tree. California comes along, frees him from the tree and says "you're free".....except for the shackles.

|5.17.07 @ 12:17PM|#

How can he be market-oriented but not open to negotiation?

|5.17.07 @ 12:21PM|#

I'm not sure that Richardson's proposals are actually market solutions, but they are certainly better than a ban on incandescent light bulbs.

|5.17.07 @ 12:23PM|#

There isn't really anything that unconventional about Richardson's claim to be a "market-oriented" Democrat, other than being explicit rather than buried under layers of feel-good big government mush. The party is committed to big government and economic regulation, and they favor socialized health insurance, but with few exceptions they came to peace with capitalism a long time ago. I think you'd have a hard time finding a Democrat who doesn't agree that the free market is a superior economic system, especially since pretty much every economist thinks this and we've all seen how well socialism worked for other countries. Cap-and-trade emissions regulation is a fantastic example of what Richardson is talking about, and it has pretty solid political support. If nothing else, the efficiency of capitalism generates much more revenue to fund liberal social works.

This isn't a defense of any of their other policies, but there's a popular perception (at least on the right/libertarian side) that the Democrats are anti-capitalism or worse. But they're not advocating a top-down collectivist economy; their only hostility is to *unregulated* capitalism. (Which is exactly why the Greens and various other lefties don't like the Democrats; they don't want a free-market solution to anything.)

Still, it's nice to see Richardson come right out and say this, because I think it shows a great deal more honesty and realism than I'm used to from any politician.

thoreau|5.17.07 @ 12:25PM|#

I lived in CA during the energy crisis of 2001. I read the newspaper articles explaining how the "deregulated" "markets" worked, and I couldn't understand any of it.

I came away figuring that a public monopoly, for all of its flaws, would at least be more straightforward and easier to understand than whatever the CA "deregulation" was.

Jorgen Harris|5.17.07 @ 12:26PM|#

The bit on carbon tax was a little sad; he basically said that he doesn't like a carbon tax because the consumers see that more directly. It doesn't really matter if you tax a producer or a consumer; the producers will pay some and the consumers will pay some.

Grotius|5.17.07 @ 12:30PM|#

thoreau,

If I recall correctly California's energy needs* were tied exclusively to the spot market.

*Or rather, the energy needs of the many of California's communities. As I understand it many of California's communities self-supply.

|5.17.07 @ 12:45PM|#

Wonder why no one tried the "bedrock principal" of the "market based" solution to slavery?

Somehow setting up a "market" with "mandates" that systematically violate the right of one individual over another is what passed for capitalism these days.

|5.17.07 @ 12:45PM|#

Sort of, yes. There was a spot market in the middle of one of the most highly regulated industries. For the most part, electric utilities were coerced into selling off their generation facilities and forced to participate in the spot market. How's that for deregulation? Lotta coercion and forcing corporation's to divest their assets all while regulating the prices they could charge and just about every other aspect of energy delivery. "Deregulation" is a misnomer. It should have been called "Transfer of market power from regulated delivery companies to speculators." Seriously, the transfer of market power was really the failure in CA. That can be remedied, but don't call it free market.

Cato does some excellent research in this area.

and here.

and here.

and here.

|5.17.07 @ 1:06PM|#

On second thought, energy policy discussions are a thread killer.

thoreau|5.17.07 @ 1:07PM|#

So fear is the mind killer, and energy policy is the thread killer?

|5.17.07 @ 1:12PM|#

What, working in energy law makes me less of a caveman?

|5.17.07 @ 1:21PM|#

I must not discuss energy policy.
Energy policy is the thread-killer.
Energy policy is the anti-market force that brings total obliteration.
I will ignore the energy policy.
I will permit it to pass over me and through me.
And when it has gone past I will turn the inner eye to see its path.
Where the energy policy has gone there will be nothing.
Only I will remain.

|5.17.07 @ 1:23PM|#

I can't post that without following it up with the "Litany Against Fun" from the Harvard Lampoon's parody of Dune (Doon):

I must not have fun. Fun is the time-killer. Fun is for
inferiors, servants and the help. I will ignore fun. I will work
through it. And when the fun is gone only I will remain--I, and
my will to win. Damn, I'm good.

|5.17.07 @ 1:26PM|#

Disengage....disengage.....

|5.17.07 @ 1:36PM|#

Joking aside, this is why energy policy will never get anywhere in this country. People don't understand how it works, and the subject is so dry that they don't want to learn it. It certainly does NOT make for good bar room debates. It's like we're comfortable accepting the vague crap the candidates spew because we really don't want to have to learn that crazy industry. I only understand a small portion of it, and I work in the industry. This barrier to familiarity is what gives regulators and politicians free reign to mischaracterize their initiatives as free market or deregulation.

|5.17.07 @ 1:41PM|#

Nat

"Which is exactly why the Greens and various other lefties don't like the Democrats; they don't want a free-market solution to anything."

I won't speak for "various other lefties" but most Greens are quite comfortable with the power of distributed market-based solutions. Centralized regulation has been enough of a problem in finding solutions to environmental problems to push much of the environmental movement towards market-based thinking.

|5.17.07 @ 1:42PM|#

Lamar,

Why are you ruining a perfectly good Dune thread with your dull and boring discussion of energy policy?

Our inability to accept that some things are complex and must be dealt with as complex will be our bane.

|5.17.07 @ 3:47PM|#

I'm a market-oriented Democrat. I want to set mandates and let the market respond.

Am I the only one who thinks "setting mandates" and being "market-oriented" are just the teeniest bit incompatible?

|5.17.07 @ 3:54PM|#

I see nothing wrong with that, R C. Then again, I'm in the totalitarian arm of the LP.

|5.17.07 @ 3:56PM|#

R C Dean:

You mean you weren't mesmerized by Richardson's awesome use of the word "market"? He said market, what else do we need?

[shifts eyes side to side, sweeps requirement of substance & plan under rug]

|5.17.07 @ 3:57PM|#

And you, Mr. FL, how many times have people called you Pro Liberace? I've been getting people call me Lamer lately, but I think I'd be more offended if they called me Flamar.

|5.17.07 @ 3:59PM|#

Why, homophobic?

|5.17.07 @ 4:01PM|#

It happens on occasion. Since I oppose Liberace and his brother, George, it doesn't make much sense. Let me also suggest that people who see Liberace in Latin words may have certain predispositions. Not that there's anything wrong with that.

It would be cool if they called you Lothar.

thoreau|5.17.07 @ 4:08PM|#

Then again, I'm in the totalitarian arm of the LP.

You mean the "I'm a libertarian, but...[insert statist position here, often quite extreme]" wing?

|5.17.07 @ 4:12PM|#

No. We believe that people should be rounded up into reeducation camps and forced to think Libertarian thoughts. If they do not conform, we shoot them.

This is the Year Zero.

Mike Laursen|5.17.07 @ 4:12PM|#

Somehow setting up a "market" with "mandates" that systematically violate the right of one individual over another is what passed for capitalism these days.

I didn't follow your point. You seem to be saying that there's some aspect of modern free markets that is analagous to the slave markets of the past, but you didn't give any specifics.

|5.17.07 @ 4:46PM|#

Mike, I think the analogy is more between artificial state-created markets like those in "cap and trade" schemes and slavery than between modern free markets and slavery.

Mike Laursen|5.17.07 @ 5:57PM|#

So, is he saying, "If someone forcibly prevents me from expelling as much pollution as I wish into our common atmosphere, they are enslaving me."

|5.18.07 @ 9:54AM|#

Try:

Any market that trades in goods/services that are purely the product of coercion is not a market in any meaningful sense of the word.

|5.18.07 @ 10:21AM|#

Any market that trades in goods/services that are purely the product of coercion is not a market in any meaningful sense of the word.

You mean like the real estate market? Or were you under the impression that the land that you live on was generated from some entrepreneur's LandMachine invention?

|5.18.07 @ 4:20PM|#

This is from a "market Democrat." Let me explain.

Do we regulate monetary supply? Do we regulate seatbelts, drugs, and food? Do we care about national security and the nation's overdependence on oil? Do we acknowedge the science of climate change? If the answer is yes, to any of the above, it makes sense to put a regulatory cap on carbon emissions, and let companies buy rights to emit pollution under that cap. It is a market-based system, with limits, like the monetary supply, food, drugs, and seatbelts. There is suddenly a market imperative to reduce oil use and emissions that are harmful to national interests and world climate. A carbon tax doesn't create a market for pollution reduction, or a cap on emissions, and could be wildliy too permissive or too punitive.

Disclosure: I have worked for Richardson and still do projects for him sometimes.

Mike Laursen|5.18.07 @ 5:58PM|#

As an impure libertarian, I'm somewhere in between. I think we have this atmosphere that is a part of the commons, so we have to have some rules about what each of us can do to it. But, I don't see any reason we need to regulate most drugs, or food, or the money supply.

|5.18.07 @ 6:30PM|#

Richardson can't be allowed to claim that cap-and-trade is the market solution. That would open the entire economy up to rent-seeking as the interests lobby to get their share of the cap.

Marginal industries will get a share since their employees fear losing their jobs. Politicians will give consumers a share at the expense of whatever deep pockets can be found.

A carbon tax in contrast doesn't require that an initial distribution of rights be figured out. It puts the focus on who can do what to decrease CO2.

That Richardson opposes a carbon tax because of the effect on consumers shows that he hopes to spare consumers at the expense of the shareholders of heavy industry.

Mike Laursen|5.18.07 @ 8:33PM|#

Would it be any different than If Congress were about to pass a carbon tax? Wouldn't lobbyists be lobbying for carbon tax breaks for their industries?

|5.19.07 @ 1:37PM|#

"he hopes to spare consumers at the expense of the shareholders of heavy industry"

Since heavy industry is going to pass those costs onto consumers, he is really just picking the point in the chain where he wants to collect.

|5.19.07 @ 8:16PM|#

It seems to me that he's the only one with a real energy plan at all - not to mention that he's really gaining momentum in other ways... these campaign ads are pretty amazing:

http://www.thenewsroom.com/details/313283/Campaign+2008?c_id=jlt

|5.21.07 @ 2:50PM|#

Just to be clear, Richardson says the carbon tax doesn't achieve the goal -- preventing carbon emissions above a certain level. When the economy is hot, people pay it, and carbon emissions go up. The whole purpose of cap and trade is to establish a cap. Further, the rights to emit carbon beneath that cap should be auctioned, not allotted. If you can afford to buy rights to emit, you can emit. Last, the carbon tax DOES hurt low-income and rural folks, and fixed-income seniors. It creates gobs of government revenue (one proposal says $50 bi/yr). That's not the approach Richardson is suggesting -- take care of the problem, don't just create a big government slush fund.

Again, disclosure: I have worked for Richardson and still do some project work for him.