The Origins of Political Electricity: Market Failure Or Political Opportunism?
THE ORIGINS OF POLITICAL ELECTRICITY: MARKET FAILURE OR POLITICAL OPPORTUNISM? Robert L. Bradley, Jr. * The current debate over restructuring the electric industry, which includes such issues as displacing the regulatory covenant, repealing the Public Utility Holding Company Act, and privatizing municipal power sys- tems, the Rural Utilities Service (formerly Rural Electrification Adminis- tration), and federally owned power systems, makes a look back at the origins of political electricity relevant. The thesis of this essay, that govern- ment intervention into electric markets was not the result of market fail- ures but, rather, represented business and political opportunism, suggests that the intellectual and empirical case for market-oriented reform is even stronger than would otherwise be the case. A major theme of applied political economy is the dynamics of gov- ernment intervention in the marketplace. Because interventions are often related, an analytical distinction can be made between basis point and cumulative intervention.' Basis point regulation, taxation, or subsidization is the opening government intervention into a market setting; cumulative intervention is further regulation, taxation, or subsidization that is attribu- table to the effects of prior (basis point or cumulative) intervention. The origins and maturation of political electricity, as will be seen, are interpret- able through this theoretical framework. The commercialization of electric lighting in the United States, suc- cessfully competing against gas lamps, kerosene lamps, and wax candles, required affordable generation, long distance transmission capabilities, and satisfactory illumination equipment. All three converged beginning in the 1870s, the most remembered being Thomas Edison's invention of the incandescent electric light bulb in 1878. - * Robert L.
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