Sunday, February 19, 2006

Cognitive Dissonance

Apparently mankind is doomed to continue reinventing the wheel. Hawaii's gas price controls, imposed last fall when the cost of fuel was hovering around $3 a gallon in many parts of the U.S., have actually triggered much higher costs for consumers. Surprise surprise!

The price controls were effective as of Sept. 1, 2005 and current controls base limits on per-gallon charges by averaging wholesale gas prices in New York, Los Angeles and the Gulf Coast. The PUC then adds a 4-cent "location adjustment" fee and another 18 cents as a market margin factor. Then a few cents more are added for transportation costs to various islands. Wholesale prices are set by the bureaucrats every Wednesday and go into effect the following Sunday. Way to go! This is the same system used by the former Soviet Union and that worked swell.

Before the gas cap law, Hawaiian motorists paid an average of 44 cents more per gallon than the mainland. Since the law went into effect in September, however, the differential has increased to more than 50 cents per gallon.

Rep. Marcus Oshiro said this week Hawaii has "achieved price parity with the mainland and in that sense, the law has been working." But he also notes that "oil companies have posted record profits during this period and without greater transparency, we are unable to determine whether the cap has allowed unreasonable profits. The enforcement was not as vigorous as we thought it could be."

One of the gas cap's key supporters is Senate "Consumer Protection Committee" (the names politicians conjure up to apply to their fiefs is an endless source of Orwellian amusement) Chairman Ron Menor, who said he will do everything he can to make sure the cap stays in place.

"I cannot support a repeal because I think that would really be caving in to the oil industry that doesn't want to be regulated," Menor said.

Menor is proposing changes to the cap which he says could save drivers an extra 16-cents per gallon. But if a 16 cent saving is good, would not a 50 cent saving be better?

This amusing situation reminds Leonidas of a discussion he had with a Communist Party local official from Sweden a few years ago on the implosion of the U.S.S.R. She said the unfortunate events could have been avoided if only “the Russian party elite had properly followed the ideas of Karl Marx and Vladimir Lenin”.

Steven Denbeste has an apt description of this mentality that applies to virtually all collectivist movements:
“When someone tries to use a strategy which is dictated by their ideology, and that strategy doesn't seem to work, then they are caught in something of a cognitive bind. If they acknowledge the failure of the strategy, then they would be forced to question their ideology. If questioning the ideology is unthinkable, then the only possible conclusion is that the strategy failed because it wasn't executed sufficiently well. They respond by turning up the power, rather than by considering alternatives. (This is sometimes referred to as "escalation of failure".)”

The noble idea can't be wrong, the solution was just "poorly implemented." So schedule a few show trials of "corrupt" managers and turn up the power.


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