(spurred on by various comments on this, and other threads)
Quite a large part of economic theory seems to be nothing but the accepted dogma, and completely useless. When the market doesn't respond as 'it should' a new external actor is introduced into the mix, to explain why the current model is still a fundamental truth, even though it lacks any sort of predictive power. ("The market fell today as investors consolidated their gains", "The markets rallied on the back of the expected announcement from China" and other such meaning less retrospective justification)
Take for example the prices of electricity in NZ, with it's supposedly deregulated market - the 'law' of supply and demand would have if a large proportion of demand goes (for example if the Tiwai Point aluminum smelter closed) then it is the LAW that the price to the rest of the market should get cheaper electricity - over supply, under demand, in what is currently a supply-constrained market. However, we then get told (and I can't find reference for this) that should it close, and stop using it's cheap hydro power then the electricity prices for the rest of the country will rise.
On EEVBlog I see a lot of arguments built on top of economic theory, but for me the foundations of such arguments are often so rotten they don't provide support for much other than hand-waving.
It is almost as bad as psychology:
https://www.theguardian.com/science/2015/aug/27/study-delivers-bleak-verdict-on-validity-of-psychology-experiment-results
Of course the price of electricity will rise. First, it isn't free enterprise, it is normally a public utility with any number of regulations - such as keeping the system working.
Take the example of solar power in California. Our utility rate has 4 price tiers; the more you use the more it costs incrementally. When you apply solar, you reduce the number of kWh you buy at the higher tiers. The lowest tier is essentially subsidized to provide a basic level of service to the economically challenged. The higher tiers pay for both incremental demand (buying power from low volume, high cost generators) and system operation. With solar, the high tier energy is reduced, less money is available for maintenance and, big surprise, there is a price increase for the lowest tier. Using less costs more.
We had a water conservation program this year. It was highly successful - for everybody except the system operator who couldn't afford to maintain the infrastructure with the reduced revenue. So, they raised prices! Now we get to pay high prices for water we don't use.
As a naive stockholder, I have only one expectation: The value of my stock increases! If it doesn't, I'm going to take my marbles and go home. If I were invested in a PE firm, I would expect them to do whatever is legal to increase the value of my investment. Buy a firm, chop it up, sell the pieces, I don't care. People out of work, buildings left empty, I don't care. I want my investment to increase! Providing job opportunities (training) is not my job! It's a matter for the government to deal with. If my state runs all the businesses out of town, it's on them. I expect the companies to move to wherever they can make me the most money. Social welfare is a government program, not mine!
There's nothing nice and cuddly about having your retirement at risk. But if you're not heavily invested, you won't be retired very long!
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