Saturday, January 14, 2017

another way to understand what's happening is to use the analogy of a cell phone contract, because it's actually fairly precise and something a lot of people have experience with.

let's say you get a new job that requires you to use a lot of minutes. you look at the plans and pick a plan that gives you unlimited minutes for a considerably higher price. it's expensive in absolute terms, but you know you will use the minutes, so you expect to save money. then, you sign the contract for five years, because you're optimistic about the job.

now, imagine that you get hit by a car the day after you sign the cell contract and it puts you in permanent disability, so that you're not going to work at all for at least five years. now, you have no expectation of needing all of these minutes that you bought - but you're locked into a five year plan.

so, every month when the bill comes in, you're paying for a service you're not using. but, because you're under contract, you can't get out.

what the province of ontario did was sign 20 year contracts with private electricity suppliers that guaranteed them a minimum revenue stream, then figuratively get hit by a car and find itself unable to use all of this electricity that it locked itself into paying for.

you can't buy a cell tower. but, the state could have paid for the wind farm. the problem is that they were afraid that the debt would become a political liability. so, they made what they thought was a great deal, instead. and it backfired very badly....

i've been clear that i'd just pass a law. but, the fastest and easiest solution would be to take on the debt.