Churn is the economic equivalent to evolution; the process of try a lot of stuff and keep what works.

• Innovation. Individuals try innovations to solve niche problems/opportunities
• Refine. Some changes are perceived as so much better they excite a cluster of adoption which refines the innovation
• Scale. Some changes reach a critical mass and sweep the general population to become the norm
• Iterate. Some changes are fads and fade way, some are lasting, some only stay as niche solutions.

In my view, regulated economic monopolies, like their political equivalents (monarchies, dictatorships) can speed up churn by requiring its adoption. When the regulators are brilliant or benevolent, radical improvements can be made very quickly. This seems the exception not the rule.

My guess is monopolies fail because of a personnel problem. Most regulators are rule-followers. Most innovators are breaking the rules. Most innovators are economically and politically outsiders. The net result is that monopolies tend to become rigid and brittle.

Compare 3 large infrastructures: Power generation, transportation and communications.

Communications was de-monopolized in the US in 1984. Churn resulted in the Internet being transformed from a very small defense project to culture changing boom, bust, boom. The Internet's expansion was significantly shaped by the porn market. No regulators I know would have said "We need more band-width, let's expand the porn industry."

Adaptive churn in communications is in stark contrast to regulated monopolies of power generation and transportation. These infrastructures are the cause Climate Change and Peak Oil. These regulated monopolies have block churn for about 75 years.

Germany's Feed-In-Tariffs have broken the monopoly of power generation. In 5 short years, individual efforts have resulted in 12% of total German electrical needs being met by renewable power generation. They have created 250,000 renewable energy jobs and exported $15 billion of their solutions in 2007.

Regulated monopolies in California have installed 242 MW of renewable generation in the last 5 years. German's in a free market, installed 4,000 MW in 2006.

I believe the proper roll of governments is to assign true costs for non-market factors such as pollution (including GHG's) and defense. Had non-market costs for supply-line defense, air quality, GHG's etc... been assigned in the 1970's, solar would have been competitive enough. Individuals and clusters would have churned.

The dictatorship of regulated monopolies blocked action to assign true cost, denying that climate change and peak oil are real. The result is we are killing our planet's ability to support us. We are becoming one of nature's project that could not adapt.

The book Good to Great is a wonderful outline of how collaborative leadership encourages churn.

There is a third alternative: public ownership that is not government ownership. It could be argued that fossil fuels should be considered common-pool goods, part of the natural patrimony of a nation that should be managed to benefit all of the people, present and future. It is also clear that governments do a pretty bad job when it comes to managing anything except public goods. Corporations are best just limited to the private goods sector. Thus, what is called for in the case of both common-pool goods and toll goods is some sort of cooperative ownership and management. A national trust should be set up to hold title to and manage these resources, with the trustees elected directely by the people instead of being appointed by the government. It would be the people themselves that decide whether these resources should be developed and depleted more quickly (to provide for lower prices in the short term) vs. conserved for future generations. As this publicly-owned trust would hold any surplus revenues, there would be no need for sovereign wealth funds.

No country has tried such an approach, probably because neither politicians nor corporations would like it. Only the people would.