Why U.S. farmers are hacking their John Deere tractors


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Tractor hacking is growing increasingly popular because John Deere and other manufacturers have made it impossible to perform “unauthorized” repair on farm equipment, which farmers see as an attack on their sovereignty and quite possibly an existential threat to their livelihood if their tractor breaks at an inopportune time. “When crunch time comes and we break down, chances are we don’t have time to wait for a dealership employee to show up and fix it,” Danny Kluthe, a hog farmer in Nebraska, told his state legislature earlier this month. “Most all the new equipment [requires] a download [to fix].”

The nightmare scenario, and a fear I heard expressed over and over again in talking with farmers, is that John Deere could remotely shut down a tractor and there wouldn’t be anything a farmer could do about it. “What you’ve got is technicians running around here with cracked Ukrainian John Deere software that they bought off the black market”

A license agreement John Deere required farmers to sign in October forbids nearly all repair and modification to farming equipment, and prevents farmers from suing for “crop loss, lost profits, loss of goodwill, loss of use of equipment … arising from the performance or non-performance of any aspect of the software.” The agreement applies to anyone who turns the key or otherwise uses a John Deere tractor with embedded software. It means that only John Deere dealerships and “authorized” repair shops can work on newer tractors.

This behavior by John Deere is no different than the immoral behavior of Microsoft to its customers (which is why I use Linux). It is unacceptable and should encourage the rise of significant competition from other tractor companies.

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29 comments

  • Sandra Warren

    A few months ago I made a light-hearted comment regarding the rise of the IoT and how “they” were going to control us soon like Skynet. I really got hammered by my colleague for buying into crazy fears against useful technology. But the more I hear about it, the more my humor is turning to concern for liberty. Your TV can be used to spy on you. Your tractor goes where someone else tells it to go, and won’t allow anyone to fix it. I love TV, and I love my tractor. This is getting out of hand when I can’t trust them.

  • LocalFluff

    Of course all companies try to lock their customers to them exclusively. Actually, all human relationships work that way. All life evolved in nature does. Farmers cannot also be tractor mechanics. Mechanics should not grow their own food. The economy consists of specialization, that means interdependence.

    Law requires tractor manufacturers to make inefficient tractors, they are forced to make bad designs and to sabotage them by deliberately introducing malwares and brakes. That is a reason to hack them with “Ukrainian software”. Jeffrey Tucker, the libertarian, wrote “Hack your shower head” with some examples of how you can remove regulatory sabotages to some of your household product, including of course the shower head which has to have a piece of plastics in it to stop the water flow. One can unscrew it and remove it and enjoy nice showers. Shower head manufacturers do make the best possible shower heads, and then insert sabotages that fit different regulations in different countries, depending on how people have voted to destroy their own lives.

  • LocalFluff

    You know that malware couldn’t exist if government didn’t force software developers to leave back doors wide open for their spies and for all criminals. A stroke of the government’s pen would immediately exterminate all malware.

  • wayne

    Sandra–
    you might like this–

    Philo Farnsworth:
    the most famous man you never heard of
    – by Jessica Farnsworth (his granddaughter)
    https://youtu.be/HHy04aN0jfI
    (10:14)
    [The only television he ever watched– July 20th, 1969. (at 9:10 in the video)]

    LocalFluff–
    Especially enjoy the line “..depending on how people have voted to destroy their own lives.”

  • Commodude

    Unfortunately there’s no large body concerned with this development, unlike auto manufacturers who have attempted to do the same thing, only to be stymied by regulatory agencies and lawmakers who required OBD-II to be accessible to everyone.

  • John E Bowen

    Localfluff,

    “Farmers cannot also be tractor mechanics. Mechanics should not grow their own food. The economy consists of specialization, that means interdependence.”

    For the most part, I believe this is true, both as a goal, and as an accurate description of modern society in all developed countries. It certainly applies to me, I’ll admit. But my own specialization is partly why I’m fascinated by the ideas of the Renaissance Man, open source hardware, and short supply chains.

    http://opensourceecology.org/portfolio/tractor/

    First, the bad news. The tractor is not slick nor sleek, with all the comforts of my grandfather’s John Deere models. On the plus side, it is much cheaper to build, is open source, and the 100 year maintenance costs are likely much lower.

    Between open and closed, proprietary systems, I don’t think it’s all black and white. I think there is a balance to be struck — certainly those farmers feel the balance has swung too far in favor of John Deere, so they take corrective action. I’m not sure what to think about Marcin Jakubowski and Global Village Construction Set, other than wow, what a vision, hope they succeed. At the really large scale, their approach seems too much like socialism; however, at the small scale of a family, tribe in Africa, a small town, it seems like a really good way to work toward a good life.

    I don’t want to go down the rabbit hole of economic theories, though. The reason the GVCS, on Earth, ties into the space economy has more to do with ideas about planning, logistics and machine shops. I was reading through Phillip Metzger’s paper on bootstrapping solar system civilization. The basic question was OK, you want to build a large, automated industrial base on the Moon. How would you go about it? There were two already existing answers: build it big, build it all on Earth and ship it all to the Moon. The other was build it perfect yet small, but able to self-replicate; put that on the Moon and wait for profit.

    The new approach Metzger’s team proposed, after running numerical models, was not at all intuitive to me. I had to reread that part several times. It said build the first generation of machines (diggers, transport, mining for volatiles, metals, etc., plus solar cells, robots) the best you can. Then just accept the fact that this generation will produce as output a next generation of machines which are actually inferior. This stumped me for a bit, then I realized that (after ice and other volatiles) the first manufactured “products” are going to be bricks or slabs of basalt and metal alloys of uncertain parentage. So, if you build your house out of basalt, your house and lifestyle is going to look a lot like the Flintstones, primitive. Succeeding generations can be better, more refined. (I think a machine generation (including robots) is anywhere from 2 to 5 years, assisted by Earth-side advances in electronics and robotics). So the system evolves over time, not only getting better materials, but becoming more fully “closed,” toward being completely self replicating.

    Finally, and getting back to your original point, our Earth society rewards specialization, but I think the situation on a lunar surface base might well reward quite a bit of general skills. This would apply to the robots as well as to human tenders. They, together, need to be able to build or fix, not everything, but as many things as possible. They would have about the shortest supply chain I can think of: 1) spares, sub-assemblies or components shipped from Earth, plus 2) regolith. If an Earth-side team designing a complex machine, truck or tractor, uses 57 different sizes of bolts, and the same team designs a similar machine, but for the Moon, and they use only 8 different sizes of bolts, we are on the right track.

    Sorry to go off on so many tangents, but your comments were most thought provoking :)

  • mivenho

    Ukraine was once the breadbasket of the Soviet Union. Ukraine’s fertile soil now is yielding a whole new crop of software hacks, thanks in part to John Deere tractors.

  • Alex

    LocalFluff it seems that did not have met a single farmer in real life. All farmers that I met in real life in last decades, were able to fulfill different professions at once, at least all of them did repair their agriculture machines themselves. This is one reason why agriculture machines shall be robust and simple built. An ideal type of farmer is an all-rounder. He fears nothing to do and work himself, from repairing his tractor until slaughtering his pigs. External mechanics or work-forces to be hired and contracted are often too expensive for farmers.

  • LocalFluff

    @Alex
    That’s because farming productivity is underdeveloped (like housing construction). Agronomy is pushing its limits chemically and biologically, but mechanically there’s much unexploited potential. A single man riding his tractor back and forth over his areal several times a year. Why haven’t autonomous vehicles taken over this already? They probably did yesterday. There’s no traffic accident risk involved. Autonomous cars’ first big application was moving them between ships and parking lots and trucks (they used to bus half an army of people in order to move them, imagine driving 10,000 cars one kilometer each, if you alone do one an hour it takes a year, oh yeah, and here’s the bag with all the car keys). 100 years ago car factories bought raw materials and manufactured even the tools needed to build cars in house. When a worker needed a screw driver it was manufactured in the same building where the plates of the car body were rolled and assembled and painted.

    Heck, compare that with today. When I (my wife) wanted the cupboard doors repainted in an old house we moved to, they picked down the panels and shipped them 500 miles to a “cupboard door painting facility”. Soon they will fly them to China and back and be even cheaper and faster! (And one day maybe to the Moon). I traditionally had expected having Mario Brothers living in the kitchen for a few days.

    I think that’s why the adjustable wrench became a commercial success in the 1890s, because it was too hard to DIY. Those who wanted to use its advantages were dependent on a specialized company to make it.

    DIY farming might be a nice life style, but it’s not rational production.

  • LocalFluff

    @John E Bowen
    Specialization, and especially open source, depends on there being many differently talented people available to do what they are best at and have good communication with each other. That is unfortunately not the reality of space flight any time soon. Astronauts have to be generalists, but the competences needed are advanced and uncertain. They have to be explorers of the unknown too. This is one of the fundamental reasons for why space settlement is hard. Physically on site one has to do everything oneself. Robots can help, but Curiosity’s drill and wheel problems and the ISS crew spending most of their time with maintenance show that it isn’t mature yet. What works here is not as easy up there.

    What good does a 100 year old tractor do? It is not maintenance cost but so called economic life time that matters. But location is eternal, both as real estate on Earth and in orbit once attained. Those delta-v’s are well invested when they provide a lasting infrastructure, such as a spacecraft bus with upgradable instruments, like Hubble.

  • Commodude

    Farmers have to be absolute generalists. You can’t wait for the damned Deere John reps to come out while your hay has been cut, because you have a small window to cut in, and it HAS to be dried, baled, and wrapped or stored before rain comes. That means the farmer has to be able to repair the equipment themselves.

    The same holds true for many other crops. All this is is an attempt by Deere John to bump others out of the repair business. This type of monopolistic behavior has been barred by legal action before, and likely this issue will be dealt with by the courts in the same manner.

  • Garry

    This is a good illustration of why there’s no such thing as pure capitalism; there has to be some regulation.

    I struggle to avoid seeing every issue as binary, and this is a good reminder. Yes, at present we have too much overall regulation, but that doesn’t mean all regulation is bad.

  • Alex

    @Commodude: Thank you for good addition to my comment.

    @Alex: There were already agricultural factories with specialied jobs, for example in former Soviet block. Self-employed proud, responsible and productive farmers were degraded to workers with limited capabilities at huge farms. This approach has failed to full extent.

  • LocalFluff

    @Garry
    Government forces software companies to create weaknesses that the spy agencies can exploit. These weaknesses are of course also exploited by foreign governments, like North Korea and Iran, and by millions of criminals. There wouldn’t exist any virus or malware problem if government didn’t regulate them into existence.

    With capitalism increased wealth is the only possible outcome. Nothing is done that doesn’t benefit both parties in a deal. Government is one sided violence and has no built in limit to how bad it can get, as we see catastrophic examples of everywhere everyday. After the collapse of the Soviet Union socialists realized that socialism necessarily must destroy a society, because socialism is based on obviously false assumptions about what en economy is. So they made a virtue out of the necessity and are now openly saying that they will totally destroy society, because that is the only thing they can do. And they made up some lie about doomsday coming because of our civilization, which is why total death and destruction, a.k.a. socialism is a good thing.

  • Commodude

    Unfettered capitalism is good for those on the top, nicht so gut for das unterrmensch.

    We’ve seen it several times in the history of the United States when regulations get too lax, first with the railroad barons, then with Carnegie, et. al.

    Regulation done correctly is beneficial. Total deregulation creates serfs and lords just as readily as socialism, just through different means. Unfettered capitalism uses absolute wealth as a means to create and underclass, while socialism does the same through government power. BOTH need to be checked.

    Farmers need to be able to work on their equipment, point blank. Deere John works on their own timetable, and I doubt they’re going to bust their tail to get out to nowheresville, upstate, New York when there’s haying that has to be done, or corn that needs to get harvested.

    That self reliance is why, when surveying the street I live on, I see nothing newer than 1980s equipment. They know how to work on the old equipment, so by and large, they run it until it’s impossible to fix. The one exception is one neighbor who just bought a new computer controlled tractor because his old one had died. Now had has to learn how to diagnose and repair a new machine. He’ll do it, but there will be much cursing on his part as he figures it out.

  • wayne

    Commodude– have to differ with you on some points.

    Unfettered Capitalism, is good for everybody.

    Railroads were heavily regulated & subsidized. Most all of them went bankrupt in the 1880’s.(and bankrupt does not imply they disappeared, they were reorganized.)

    Airlines in contrast, were totally deregulated in the 1980’s. Fierce competition ensued. It’s less expensive by any measure, to fly now, compare to 1975.

    I have no problem with any of the so-called “robber-baron’s,” Carnegie & Standard Oil, in particular, drove the price of steel & finished kerosene, down dramatically & over time. By the time Rockefeller was charged with violating the Sherman Antitrust laws his alleged “monopolistic grip” on oil refining no longer existed, and I would maintain it never did exist.
    (His attempts to engage in “predatory pricing” were a complete failure. On more than one occasion, his competitors build new Refinery’s for the express purpose of being bought-out by Rockefeller and saddling him with higher overall costs.)
    (Recall, “monopoly” requires restraining supply– by no measure were any supplies of petroleum and refined products, intentionally held back
    The whole “story” of the “robber-baron” era, a Fiction, created by Progressive Statists to impose their Cartelization Fantasies, on any number of industries.

    “Rules of the Road” regulation– I have zero problem.
    Primary, secondary, and tertiary Intervention by the Feds– that, I have a huge problem.

    I re-read this original article—- the author is co-mingling disparate stuff together, that should not be co-mingled.
    There is a huge difference between “required software updates,” for computer-controlled functions on a tractor, and plain old just-running-your-tractor.
    (My neighbor has a Farmall tractor from 1948, and the whole machine is 100% analog.)

    Unless you are buying & using brand new state of the art machinery, and utilizing GPS and computer-controlled functions, with proprietary software, you have nothing to worry about.
    If you want GPS controlled machinery– shop carefully.
    On the other hand– nobody appears to have problems with cell phone manufacturers locking their phones, and if you don’t update your IPhone, it won’t work. (I own a prepaid tracfone myself.)
    Looking around my house– I see a lot of items with “no user serviceable parts,” and 3 items in particular– “warranty is void if cover is opened and seal is violated.”
    I’m not a Farmer, but I do know there is are huge differences between a generic “tractor” and say a computer-controlled Harvester or Combine. Most Farmers I know, are fairly good mechanics and do simple maintenance on their machines. If they need a new head-gasket however, they aren’t generally doing that task themselves.

    I think the greater point here, has to do with proprietary software, attached to ones farm equipment.

    Highly recommend:
    Murray Rothbard:
    “The Rise and Fall of Monopolies” (American Economy Lecture 4)
    From- “The American Economy and the End of Laisse Faire 1870-WW2.”
    https://youtu.be/0sxfMjKD_Ao
    (2:03:35)

    (All the History you were never taught in HS or College.)

  • Commodude

    Actually, a head gasket is a fairly simple, though time consuming repair, which most farmers I know will readily do themselves, particularly if the choice is a crop failing due to lack of required work or waiting for the tractor dealership to repair the equipment for them.

    There’s no such animal as a “simple tractor” any longer, as most of the controls are fly by wire. A tractor built before the drive by wire controls is a much different beastie than the modern tractors referenced in this piece.

    I see the same labels on the equipment around my house…however, as I’m an electronic tech by trade, I mainly ignore those labels. The difference between these labels and the software running Deere John’s tractors is that the software makes repair problematic if not impossible. The manual for the tractor we had where I work had numerous repair codes listed in the manual, and most of them simply stated in the troubleshooting chart “refer to dealer for service.”

    The Deere John was replaced with an implement from another manufacturer. It’s not as mechanically reliable, however, the manual is complete enough for the mechanics to make the repairs in house rather than calling the dealership. When you’re using the tractor for snow removal, time matters. After the third time dealership service was unavailable when the tractor died in a snowstorm, the decision was made that the tractor needed to be replaced prior to the next snow season.

    The right to repair is settled law in most cases in the realm of automotive repairs. All the farmers and other equipment users are asking for is that the same legal status we have as vehicle operators be applied to farm and grounds maintenance implements.

    It’s not too much to ask.

  • wayne

    Commodude–
    Good stuff. highly informative.

    -Personally, I am damn handy with small tools, and I can change out (mechanical) parts in home-appliances, and change my car oil, but I envy your ability to do/perform electronic-repairs. I rehabbed a house one time, did all the mechanicals/electric myself but I had to pay an electrician/plumber, etc., to certify it was all to Code, before I could sell it.
    [that highly focused my mind, I had to be sure in my own head the electric wouldn’t burn down the house, in order to sleep at night.]
    –My HVAC guy, was nice enough to show me how to diagnosis my furnace circuit-board, it flashes simple codes, and have an extra one on hand. If the motor goes however, I’m not going to rewind it myself. And personally, I avoid the high-tech washing/drying machines, because I can’t fix them mechanically and definitely can’t deal with their electronics.

    -I would defer to individual farmers to decide when they need to send-stuff-out for specialized (mechanical) repair. (and they should not be artificially forced into decisions.)

    I am opposed to companies creating artificial lock-ins, and would encourage all these folks to develop and utilize, and pick-n-choose selectively, any of these tools, to their own benefit as much as possible and avoid lock-ins.

    Not trying to be super-nuanced or overly picky, but I’m seeing this as a software IoT type of ‘thing. It’s akin to Microsoft and Windows in a lot of respects, but I’m differentiating between the Device itself and the Software driven controls that John Deere wants to up-sell and/or fully integrate and lock-you-in to their products.

    Question– Relate this John Deere ‘thang, to the Seed Companies that sell proprietary seeds and forbid farmers from perpetuating the strain by themselves.
    -I’m ignorant in large part on that topic, but as I understand it (in part) proprietary seeds and farmers, is a growing thing.
    (Isn’t there a Corn strain, that is immune from Roundup?)
    ((I’m only versed in these topics, just-enough to be dangerous, but do realize there are multiple dimensions.))
    How is that being dealt with?

    My only real point is possibly– government mandated intervention should be the last resort.
    It may be necessary but should not be exclusively relied upon.

  • Garry

    Thank you, Commodude; you articulated what I was thinking, much better than I could.

    Wayne, monopolies may not be harmful in the long run, but that doesn’t mean that attempts at monopolies don’t do harm.

    Imagine an electric company with a local monopoly raising prices through the roof; maybe in the end other suppliers come in and prices lower, but what about those people who get shut off in the meantime? Such as a seafood restaurant that has to shut down, losing not only the thousands of dollars of ingredients, but permanently losing customers?

    More in line with the original article, if Deere continues this policy I imagine other manufacturers will come in and ultimately provide better alternatives, but in the meantime, what about the farmers who lose their crops because they can’t get the Deere dealer to fix the tractor fast enough?

    I like to say (paraphrasing I forget which ancient Greek philosopher) “the opposite of dysfunction is dysfunction.” Right now we mostly have too much regulation, but clearly the optimum level is not zero regulation.

  • wayne

    Garry–
    Perfectly ok with a level of regulation, the details of which are open to debate. (personally, I’m fond of pre-1937, but would have no problem with pre-1895. I also know in my heart that will never, ever, happen, ever.)
    Attempts to “monopolize” both hurt and help specific groups, at specific times, and depend upon which point in the production curve one is at.
    -This gets into area’s of predatory pricing and attempts at monopolistic behavior, we differ upon.

    Reference John Deere– are we talking “the tractor won’t physically function unless JD gets directly involved,” or are we talking “The software controls features have to be serviced exclusively through JD techs or they won’t function?”
    Again, not trying to be super-nuanced, but the original article co-mingles different concepts together. Some of which are good, bad, and indifferent, and may or may not require government intervention.
    If the chief complaint is– the tractor won’t run until the software update is downloaded, I’d buy a different tractor, not appear to be begging the government to design JD equipment.
    My preference would be, to let the Market, punish John Deere, if they need to be punished.

  • Edward

    I agree that a majority of maintenance has to be local. The farmer has to be able to do the maintenance and repair that keeps his equipment functioning when it is most needed, and when it is most needed is when it is most used and is the most likely time to breakdown.

    The Moon analogy seems to fit nicely. Those on the Moon will have similar problems as farmers, needing repair now, not later.

    Lunar development will be interesting to watch. Which method that John E Bowen suggests, in his comment above, will provide the best results? I suspect that each group that sets up bases on the Moon will try their own method, and experience will determine which works best under which circumstances.

    I have long said that there haven’t been any major inventions since the laser, but I have recently decided that additive manufacturing (3D printing) is going to prove to be a major society-changing invention. Lunar bases (and Mars colonies) will not need much in the way of Bridgeports and lathes, because the 3D printer will perform most of the same function with less scrap material.

  • LocalFluff

    @Commodude
    It is true that the “untermenschen” need to use violence to loot others in order to survive. Just look at them in the Middle East, where they live, for the last 1400 years. How well they have done for themselves together. Untermenschen should die. That’s their destiny. And we the rest in self defense need to help them die.

    Oh, and the great entrepreneurs who created America’s wealth at the end of the 19th century, creating cheap transportation and energy that saved the lives of millions of poor children, how bad it was! No, socialist North Korean “Juche” where each individual isolates himself from every other human being and tries to live like Robinson Crusoe, or rather like an outcast monkey in the desert, that’s the way to go stone age again!

    Socialists have no understanding of what an economy is. That’s why most socialists have died, they kill themselves out of stupidity. The brain is the essential organ in a human body,. and socialists refuse to try to use it. It’s not at all a matter of “views”, it’s a pure and simple malfunction.

  • Commodude

    Wayne,

    This is a situation where the tractor/implement will not function at all without intervention by Deere John. The software controls run so much of the machinery that they are useless without intervention.

    For instance, a code for hydraulic oil overtemp wall completely shut down the tool, even if the fix is to simply remove the debris from the fins on the oil cooler. Once a code is set, Deere John needs to clear it to regain function.

  • ken anthony

    John E Bowen,

    I’ve been blogging about the open source global village stuff for use on mars for over seven years now. They may be socialists, but the concept would work fine in a free market mars colony.

    Monopolies can only exist where govt. prevents free competition. Business people are not saints, but when they have to compete for customers (because no protectionist law stops it) the consumer not only wins but regulates the business without any need for law.

    Politicians often make laws to justify their own existence where none is the best option.

  • wayne

    ken Anthony–
    Good stuff.
    Government is the Mother of all Monopoly & Cartel.

    And I’ll push this one again–
    Murray Rothbard:
    “The Rise and Fall of Monopolies” (American Economy Lecture 4)
    From- “The American Economy and the End of Laisse Faire 1870-WW-2.”
    https://youtu.be/0sxfMjKD_Ao
    (2:03:35)

    Commodude–
    Thank you.
    If that’s the situation, I’d look seriously at switching out of John Deere equipment to a more user-friendly Company.
    The last people I would want involved, is anyone from the Nebraska Legislature.

    tangentially– take a look at this.

    Case IH Autonomous Concept Vehicle
    https://youtu.be/MwC_Hzm5Z9s

  • Garry

    Edward wrote,

    “Lunar bases (and Mars colonies) will not need much in the way of Bridgeports and lathes, because the 3D printer will perform most of the same function with less scrap material.”

    I’m glad you said “mostly’; I’m used to hearing people say that 3D printers will completely replace traditional processing. The can replace traditional processing when the parts in question don’t have special requirements for high hardness, very low surface roughness, or other properties/characteristics that require heat treatment or other processing that cannot be done on the types of materials that can be used in 3D printers.

    If 3D printers catch on they will steadily decrease the market for processed parts, but I don’t think it will disappear completely until we have other technological breakthroughs.

    Ken Anthony wrote,

    “Monopolies can only exist where govt. prevents free competition.”

    This is mostly true, and reminds of the reform effort Japan has been making for more than 20 years now. A big problem in Japan was (and in some sectors still is) very high barriers to entry set up to preserve the handful of companies controlling each industry, and they’ve been slowly dismantling that.

    For example, at the urging of the existing breweries, after the War the government set a regulation that as a condition for getting a brewery license, one had to brew a ridiculously large amount of beer per year, requiring a very large-scale operation. When I lived there in the 90s, there was one brewer in Okinawa (I never saw their beer in Tokyo) and 3 in mainland Japan, and their products were all pretty similar.

    At one point that regulation was changed, and not only are there a lot of other breweries, but the big, traditional breweries have offered a wider variety of products (it’s a pity that, now that there’s a lot of variety, I limit myself to one drink per day).

    I would say that the fields most vulnerable to monopoly are those with a high entry barrier, whether that barrier is government imposed or just due to the nature of the business. Electricity comes to mind; it doesn’t pay to be small scale, and electric companies have to not only produce power on a large scale, but the electricity has to be available 24/7, be of the proper voltage and cycle, and not have spikes. Then there are challenges to distribution; it wouldn’t be good if there were 80 companies, each having its own distribution lines (although it would be a booming time for the companies that make and install the power lines)

    If left alone, the electric industry would be dominated by a few big players who could make a lot of mischief in the short/mid term. Like it or not, proper competition and reasonable pricing (in the short/mid term) require government regulations to work properly. Of course, the key is determining the specific regulations; not all situations have regulatory solutions that are good and fair in everyone’s eyes.

  • wayne

    Garry–
    Good stuff.

    You would enjoy this–

    Richard Epstein,
    “A History of Public Utility Regulation in the Supreme Court”
    https://youtu.be/JudYYs4eKZU
    (59:32)

    “Rate regulation today is often conceived of as an exotic topic of interest only to a select group of pointy-headed specialists. But the truth is quite the opposite. The history of rate regulation raises some of the most fundamental challenges to the organization of a free society. This lecture will trace the evolution of the doctrine from its common law origins in Sir Matthew Hale’s seventeenth century treatise, De Portis Maris (Of the Gates of the Sea) through its incorporation into American Constitutional Law to the major synthesis of rate regulation in the 1944 decision in Hope Natural Gas v. Federal Power Commission. On the one side lies the need to constrain monopoly profits; on the other lies the need to prevent confiscation of the invested capital of the regulated industry. The effort to achieve those twin goals gives rises to procedural and substantive challenges that in one guise or another are with us today.”

  • Edward

    Garry wrote: “I’m glad you said “mostly’; I’m used to hearing people say that 3D printers will completely replace traditional processing.

    People tend to get overly excited over new technologies, thinking that they will make previous technologies virtually obsolete (e.g. horsewhips). Sometimes they are right (e.g. railroads made most canals obsolete*) and sometimes they are wrong (e.g. laser cutters and water-jet cutters did not make other metal cutters obsolete). 3D printers have their limitations, but I am still surprised at how many parts of a rocket engine can be made by these limited-capability machines.

    My expectation is that one 3D printer will go to the Moon (and Mars), and it will make most of the tooling needed to make most of the other tools that are needed there, mostly made from local materials.

    Garry wrote: “If left alone, the electric industry would be dominated by a few big players who could make a lot of mischief in the short/mid term.

    This happened in the (People’s) Republic of California about 15 years ago. The State of California decided to turn the power company into a distribution monopoly, where the power was generated by multiple other companies, but the government setup the regulation unwisely. The rules were set so stupidly that the generating companies put California over a barrel, using power outages as a means of extorting high prices for electricity. California had an emergency fund of $10 billion, and the electricity generators siphoned off $9 billion of it. The infamous Enron was one of the siphons.

    The poor implementation of government regulation of electricity had failed to turn the generating companies into competitors that sought to lower costs and prices.

    * Despite the heavy use of the Panama Canal, many ships take containers from Asian ports to North American west coast ports, where they are placed aboard trains that go to the east coast and are placed aboard other ships that take the containers to Europe. The Suez and Panama Canals are still very useful, but many others, built inland in the fifty or so years before and after 1800, have become obsolete.

  • Garry

    Edward, your comment on canals reminds me of what Mark Twain write in Life on the Mississippi about the riverboat pilots union.

    Steam-powered river transportation was all the rage for a decade or so, and of course accidents were expensive. Riverboat pilots decided to form a union, and set up a system to exchange info on the river conditions (depths, etc.) that only they had access to. If a boat had one union pilot, all pilots had to be union. Soon the union had the owners over a barrel, and non-union pilots couldn’t provide the level of safety, so the union effectively had a monopoly.

    So of course their fees went way, way up, which was once factor (but maybe not the decisive factor) in making the industry obsolete.

    I haven’t read that book in years, but that chapter struck me as giving insight into how unions work more than 100 years later, in much greater detail than I describe.

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