Who really pays?

With summer storms hitting the DC area every week or two many areas in the region have suffered a loss of power. The local government enforced energy monopoly (Pepco) is being criticized by the Maryland government and they are threatening to take action against the utility giant. While this kind of rhetoric may sound good to voters, it is really the voters that are the ones punished. Politicians and lawyers are the only real winners.

This is because any fine or penalty placed on Pepco is not paid by Pepco, it is paid by Pepco’s customers, the people of Maryland. Businesses (particularly corporations) do not pay taxes, penalties, etc… those things are paid by the customers through increased costs and lower quality service. In this circumstance the tax-payers are being screwed over twice. First, tax dollars are going to lawyers and bureaucrats to punish Pepco, that is a reduction in resources for other government services like police, fire, roads, etc. Second, if Pepco is fined they will reduce the quality of service to the citizens or lobby to raise prices to cover the costs.

This is basic economics, the only people that pay for things are individuals, not businesses or governments. In the case of government (and government enforced monopoly) coercion is used through taxation whenever funds are running low. Individuals on the other hand, need to work harder and create more value for society in order to purchase more. This political pandering against Pepco should be stopped and more market forces introduced into the energy industry. The only one that will ever be punished for Pepco’s incompetence is the citizens who are forced to use them for power.

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