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K. Lloyd Billingsley - Contributor
[Courtesty of Pacific Research Institute]

K. Lloyd Billingsley is Editorial Director for the Pacific Research Institute and has been widely published on topics including on popular culture, defense policy, education reform, and many other current policy issues. [go to Billingsley index]

California Christmas List
More Choices Through Market-Driven Policies…
[K. Lloyd Billingsley] 12/24/03

Gasoline prices have dropped 48 cents since September to their lowest point in a year, an average of $1.57 a gallon according to AAA. This comes as a practical holiday gift for Californians, who depend on their cars. It also provides a lesson for legislators.

Lawmakers tend to clam up when prices are low, like global warming alarmists during deep-freeze winters. But when prices rise, politicians have a habit of calling for price controls and fulminating against oil companies. During the recent election, Lt. Gov. Cruz Bustamante called for price controls on gasoline, prompting the Sacramento Bee to pronounce this the dumbest idea of all candidates. As the article noted, it's an issue of supply and demand.

Supply is a problem nationwide. Refineries are dwindling - just 149 last year, down from 324 in 1981, according to the Federal Energy Information Administration. It's an even greater problem in California because few out-of-state refiners make gasoline that meets the state's clean-air regulations.

Legislators can improve supply and keep prices low by rejecting the folly of price controls, making it easier to build new refineries, and ignoring environmental lobbyists who would like to see gasoline prices in the range of $3-5 a gallon.

The market is also doing a good job of keeping prices low on cell phones. Companies are tripping over themselves to offer consumers good deals, lowering prices 69 percent over the past decade. But those consumer gains are now under threat from the California Public Utilities Commission, whose regulatory schemes would mean fewer companies entering the market, fewer choices, higher prices, and more inconvenience for consumers. Analysis by the Law and Economics Consulting Group estimates that the new regulations would amount to a 20-percent tax increase, in addition to the 20 percent already tagged on to their monthly bill.

Legislators should allow the market to work in this burgeoning area. They can also, as in the energy field, review existing regulations for effectiveness and punitive effects on consumers. The rule should be: if it isn't broken, don't break it.

Repairs should be limited to what does need fixing - California's government education monopoly. The system delivers bad products at high prices, especially school facilities, as the Pacific Research Institute will show in the forthcoming study No Place to Learn. It takes six years to build a school, often more, and the price will always be as expensive as possible. Meanwhile, student achievement remains low, revealed by the high remediation rates in math and English by the very students who are supposed to be the best. The monopoly system - unaccountable, wasteful, and corrupt - leaves parents and students with few choices.

Legislators can fix that by allowing those trapped in failing schools to attend any school in the state. In the long run, legislators should establish full educational choice for all Californians as a matter of basic civil rights.

For legislators the lessons should be clear. More market-drive policies will expand choices and make life better in the golden state.

copyright 2003 Pacific Research Institute




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