BIG SUR, California - The famed coastal road between Lucia and Big Sur,
America's most beautiful stretch of scenery, was blocked last week by a
minor landslide. It took unionized road crews three days to clear the
rockfall - this from a nation whose World War II naval construction teams
used to build entire airfields and harbors in 24 hours flat.
Meanwhile, California's electric system, the nation's largest, is on the
verge of total collapse. Power outages and brownouts are common.
Businesses, starved for power, are cutting production, or decamping to
other states. This sounds more like North Korea, or Bangladesh, than
high-tech California, America's most populous, dynamic state.
The most remarkable thing about California's power crisis is that it's
entirely due to the stupidity, ineptitude, and cowardice of the state's
politicians. Some five years ago, California de-regulated power utilities
and ordered them to buy electric power on the spot, or daily, market rather
than sign long-term contracts with suppliers. The price utilities charged
consumers for electricity, however, was kept frozen. Wholesale prices were
freed; retail prices fixed.
Last fall, a national shortage of power, high fuel prices, and growing
demand for electricity by California's computer industry in Silicon Valley
combined to produce power generation shortages and huge increases in the
cost of electricity. Powerful, well-funded environmentalists, and leftwing,
anti-business groups like the Sierra Club, had blocked building of new
power plants. The New Age dot.comers who claimed the Internet would
revolutionize mankind and make obsolete "old industry" like electric
utilities refused to build the plants to power their computers.
Unable to pass surging electricity costs to consumers, the state's
utilities ran up billions of debts, and now face bankruptcy. Unless the
state rescues them, their collapse could set off a chain reaction financial
panic in the US banking and bond markets.
California's bland Democratic governor, Gray Davis, who has made a career
of never offending anyone, desperately tried to find a solution to the
crisis that avoided the simple, obvious solution: raising retail rates to
realistic, market levels. As the lights flickered and dimmed, Gov. Davis
resorted to accusing unnamed 'profiteers' for the mess he and his
predecessors had created, a charge more worthy of the Soviet Union in the
1930's than 2001 California. Now, in a retro-return to 1960's Third World
socialism, Gray is calling for re-nationalization of the power industry.
Watching California's self-proclaimed 'progressive Democrats' struggle with
this mammoth cock-up should once again remind all voters that politicians,
like children, should never be given more than pocket money. In spite of
two thousand years of contrary evidence, each new generation of politicians
believes they can somehow violate with impunity the immutable laws of
supply and demand, Gov. Gray's flat-earth solutions to California's power
problems being exhibit A.
California's current folly mirrors most American's abysmal ignorance of
basic market economics. The heads of American students are filled with
trendy, leftist nonsense; sociology, anthropology, women's studies, and
marxist interpretations of history. Very little is taught about the ABC's
of the free market system that make America the world's richest, most
successful nation. In fact, universities have become the last bastion of
old-time marxist thinking, passed on by one generation of incestuous
academics to the next. Politicians seeking to buy votes from special
interest groups lap up the economic nostrums put forth by academia. To
whit:
Everyone has the absolute right to:
- Free medical care and to government-controlled, low-cost drugs;
- Free education, paid by the state;
- "Affordable housing" that is, below-market cost rents paid by someone
else;
- Minimally-priced public transportation, heavily subsidized and run by
government;
- Public-owned broadcasting to 'preserve national culture' and ensure
"quality" programming - whether the public likes it or not.
Now, one must ask, if it's logical for government to enforce artificially
low prices for health care, drugs, education, housing, and transport, why
stop there? Why shouldn't government also control prices of two even more
basic necessities, food and clothing? Many nations massively subsidize
farmers, but such programs generally raise retail prices, not lower them.
Isn't it logical that government set up its own non-profit stores to sell
food and apparel?
One government has tried all the above; the late, unlamented Soviet Union.
There, drugs were free; apartments rented for $12 monthly; flying Moscow to
Vladivostok on Aeroflot cost $23; education for all was free;
government-run stores sold food and clothing at cost.
The result was not the anticipated socialist paradise, but ubiquitous
shortages and brutal repression, leading to final collapse. Medicines were
unavailable; hospitals medieval. Russians waited ten-years for tiny,
crumbling apartments, or lived in squalid dormitories. Schools were
backward; the national transport system was worthy of India. State media
blared propaganda and outrageous lies.
Food and clothing stores were almost empty of goods. Soviet citizens spent
half their dreary lives waiting in interminable, mind-destroying lines.
Everything in the USSR was 'affordable' - except that nothing was
available.
When prices are set artificially low, shortages and rationing are the
inevitable result - what occurred in the Soviet Union, and what is
happening today in 'progressive' California. The economically challenged
Gov. Davis clearly needs some tutoring in basic free market economics.
Copyright Eric S. Margolis 2001
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