Politicians keep pulling the strings but can’t figure out what caused this tangled mess

Politicians have so much hubris they think they can pull the strings of the marketplace and make it dance to their tune. Invariably the result is a tangled, strangled pile of rubble.

Take the “negotiated” settlement with a handful of lending institutions that will redistribute $25 billion nationally due to what is being called questionable foreclosure and lending practices. In Nevada alone 20,000 Nevada homeowners have been handed an average of about $97,000 apiece. The costs will be passed on to customers and future borrowers.

In the vast majority of cases people purchased homes they could not afford, urged on by federal policies that threatened punishment of lenders for redlining and discriminating and aided and abetted by gimmicks such as balloon payments, ARMs and mortgages packaged as securities.

This is tantamount to urging people to bet their life savings on red and then forcing the casino to give back money to the losers by tightening the slots and table odds.

But politicians think they can better handle your money than you can in a free marketplace.

It is the same with higher education, where government entities have been urging people to go to college by providing grants, loans and scholarships, which has resulted in skyrocketing tuitions and degrees of little practical value.

Then there is the Nevada Legislature, as fine an example of incompetent puppet masters as one could find.

There is a bill working its way through the halls in Carson City that would cap the cost of an emergency room visit. Assembly Joint Resolution 9 seeks to amend the state Constitution to set a price cap at no more than double whatever Medicare pays. That’s the ticket.

Why stop at emergency room visits? Let’s cap grocery prices and gasoline and power bills, too.

No, wait, on power bills they have a couple of strings they are pulling there.

Senate Bill 252 would require NV Energy to buy even more overpriced renewable energy, which currently costs at least triple the cost of power from natural gas and coal, and pass the cost along to ratepayers for the next 20 years no matter what happens to the price of fuel or technical breakthroughs.

Then there is Senate Bill 123, which basically spells out how, when, where and what NV Energy must do for the next two decades without any regard whatsoever to cost. It also appears to turn the Public Utilities Commission from being a guardian for the ratepayers to being protectors of the shareholders of NV Energy.

The bill would require NV Energy to decommission its coal-fired power plants years early and require ratepayers to cover every dime of the cost of tearing down the plants, paying off any long-term contracts and even the value of any coal left lying around unused. Then ratepayers would have to cover the cost of building or contracting for new natural gas and renewable energy facilities.

One PUC commissioner called the bill “more smoke and mirrors.” Another said it fails to “provide real protection for ratepayers.” And the third one called it a “huge gamble for ratepayers and shareholders.”

Though NV Energy estimates power prices will increase only 4 percent more than is already expected, PUC staff adviser Anne-Marie Cuneo said the plan would keep rates down in the short-term but would load higher costs at the end.

  • “Your kids will end up paying for electricity that you used nine to 10 years ago, with interest,” Cuneo said.

Of course Gov. Brian Sandoval and Sen. Harry Reid have endorsed it.

“This bill will help strategically position Nevada as a leader in clean energy,” said Reid. “Retiring coal plants while developing new, renewable energy projects is right for Nevada.”

And a leader in power bill costs?

“The benefits of this energy proposal for Nevada are many,” said Sandoval. “SB 123 would create over 4,000 new jobs while ensuring Nevada remains the renewable energy capital of the country. I look forward to working with the Legislature on this important public policy and urge the Legislature’s support so that I can sign it into law.”

And the rest of us will be paying the salaries of those 4,000 new jobs, mostly temporary construction jobs, if we still have jobs as companies cut back expenses so they can pay to keep the lights on or even turn off the lights and shut down entirely.

But the puppet masters insist they know more about how the marketplace should work than the millions making daily transactions to each other’s mutual benefit.

As Adam Smith wrote in “The Wealth of Nations“:

“Every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man, or order of men. The sovereign is completely discharged from a duty, in the attempting to perform which he must always be exposed to innumerable delusions, and for the proper performance of which, no human wisdom or knowledge could ever be sufficient …”

Smith has been proven correct countless times since he wrote that in 1776, but the puppet masters keep pulling the wrong strings.

6 comments on “Politicians keep pulling the strings but can’t figure out what caused this tangled mess

  1. Rincon says:

    I agree that it’s ridiculous to limit a hospital to charging double what Medicare pays. Although hospitals apparently profit from Medicare as evidenced by the fact that all of them accept Medicare patients and charging someone even double Medicare rates is essentially theft, this law is essentially a tiny band-aid over a gaping wound. How ridiculous.

    You also continue to miss a lot of really cool government subsidies and benefits like agricultural subsidies, including ethanol, which nobody except for corn farmers supports. There are also a host of tax benefits for both individuals and corporations along with government subsidies for a variety of industries. FEMA benefits for disaster victims comes to mind as well. Loose regulations allowing individuals and corporations to hide money offshore will probably never be addressed. The ability to set up corporations anonomously in Delaware aids and abetts many, many crimes, but most us of don’t even know it exists. And of course, possibly the largest largesse of them all, a set of laws allowing the medical industry to function essentially as a huge cartel. See the Time article for some of the evidence on that one

  2. Dave says:

    Multiply the negative effects of the legislature on Nevada by 50 and you will approximate what is happening in the rest of the country. All caused by lawyers
    who believe they are more knowledgeable in business matters than the real business men are. Unfortunately they command more respect than they deserve from good people who have no understanding of what is happening.

    If the federal government were to limit it’s actions to those enumerated in the Constitution the nonsense would end at both the federal and state level. Of course this would take courage and intelligence not displayed in significant measure since the days of the founders.

    To my knowledge the Constitution does not authorize public funds to be used for charity however appropriate it might seem. When the POTUS unilaterally declares that work is not required for assistance he violated his oath of office and yet no one in the Congress uttered a word against him or tried to stop it.
    Just more violations of Oath of Office.

    It is my considered opinion that we will never return to greatness until we find and elect people of knowledge and integrity who will respect the constitution
    and see to the banishment of the few who do not. This includes judges who rewrite legislation so that it meets the terms required to make it acceptable for passage. Anyone believe that a penalty is the same as a tax? Check your dictionary, I did.

  3. Wendy Ellis says:

    It’s a crying shame that our own NV State Legislature (particularly in the State Senate), care nothing about what is in the best interest of their own constituents. Can it be that they truly believe SB252 and SB123 would be good for our state? That they would be good for NVE rate payers? If so, they are fools. If they know what these bills mean for Nevadans, and vote for them anyway…well, they are corrupt.

    Isn’t anyone tired yet, of financing NVE’s schemes? 2009 ARRA Stimulus dollars provided them grants to partially finance their ASD program (smart meters). Rate payers will pay for the rest.

    The captive rate payers are whom NVE can always depend upon. Why should this be? Because they have to provide the best rates and compete for our business? Read some of the transcripts from their quarterly meetings with investors. I have. Michael Yackety-Yack is a jerk.

    They welcome extra-hot weather, because they sell more power. But they don’t mind when we have a cooler spring-summer, because they are allowed by NV law to increase rates for cost recovery, due to lost sales. No matter what, they can’t lose.

    Every quarter, they propose rate adjustments to the PUCN. The PUCN is required to serve a dual role: They have to balance the protection of rate payers, yet cannot force a utility company, with shareholders, to decrease earnings below a certain rate; all while following the laws passed by our own NV State Legislature.

    Perhaps I should have invested LOL! But I have scruples, and no money to speak of.

  4. The feds are only picking up half the cost of that power line to Ely.


  5. […] NV Energy said rates would increase only 4 percent more than they otherwise would, but PUC staffers have questioned the figures. […]

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