More on Markets as the Way of the Past

The pendulum swings between big government and free markets, but where does that leave entrepreneurs?

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Wow—just a week after the Los Angeles Times published its analysis of how the political climate is turning against free markets, the Wall Street Journal has its own piece on the same subject. While this is, overall, a more balanced piece, it still embraces the same false dichotomy that the L.A. Times piece did. An excerpt:

On the state level, California regulators clawed back as much control as they could of the state's electricity market after a failed experiment in deregulation that started in 1998. "Excesses by markets bring the pendulum swinging back toward government," says Michael Peevey, the Democratic president of the California Public Utilities Commission.

But in this example especially, we did not see a choice between "market excess" on one side of the pendulum's swing and government regulation on the other. Most people say the California electricity market was "deregulated," which brings to mind a playing field where business people are free to act as they want. But that wasn't what happened. The deregulation was more of a "reregulation" that moved the system from public monopoly to a state-controlled monopolistic private system. Competition is the lifeblood of entrepreneurs, and there was little competition in either system.

Luckily, we don't have to choose between only those two options. We can also genuinely lift rules that inhibit entrepreneurs' ability to experiment with their businesses and figure out what works.

Has the word deregulation been so sullied that we need a new vocabulary to describe entrepreneur-friendly policies, whether it be the arena of electricity, the environment, or housing?