The Problem with Phony Rights
By David Henderson
How can treating electricity as a right undermine the aim of universal access to reliable electricity? We argue that there are four steps. In step 1, because electricity is seen as a right, subsidies, theft, and nonpayment are widely tolerated. Bills that do not cover costs, unpaid bills, and illegal grid connections become an accepted part of the system. In step 2, electricity utilities—also known as distribution compa- nies—lose money with each unit of electricity sold and in total lose large sums of money. Though governments provide support, at some point, budget constraints start to bind. In step 3, distribution companies have no option but to ration supply by limiting access and restricting hours of supply. In effect, distribution compa- nies try to sell less of their product. In step 4, power supply is no longer governed by market forces. The link between payment and supply has been severed: those evading payment receive the same quality of supply as those who pay in full. The delinking of payment and supply reinforces the view described in step 1 that elec- tricity is a right. We describe these steps sequentially, but they can be thought of as parts of a low-quality, low-payment equilibrium. This equilibrium, we argue, is what differentiates electricity markets in developed and developing countries.
This is from Robin Burgess, Michael Greenstone, Nicholas Ryan, and Anant Sudarshan, “The Consequences of Treating Electricity as a Right,” Journal of Economic Perspectives, Vol. 34, No. 1, Winter 2020, pp. 145-169.
Hmmm. Do you think maybe that applies, in the long run, to treating health care as a right also?
HT2 Timothy Taylor.