Saturday, February 20, 2021

The Free Market, Not Only In Texas

"Free markets." With all due respect to the non-partisan Renew Democracy Initiative, which is dedicated to the critical project of promoting liberal democracy in the USA and abroad, this is not a good time:


A non-profit media organization based in Austin notes

Millions of Texans have gone days without power or heat in subfreezing temperatures brought on by snow and ice storms. Limited regulations on companies that generate power and a history of isolating Texas from federal oversight help explain the crisis, energy and policy experts told The Texas Tribune. 

A Corpus Christie newspaper explains

In 1999, Texas deregulated its energy market. This meant that instead of cities or other local entities completely controlling the supply of energy to customers, the provision of electricity would be broken up into three components -- generation, transmission, and retail. Under this new regime, a customer would have the choice between various retail electric providers, with the hopes that such a move would lower prices. However, as we have experienced before and are learning yet again -- you often get what you pay for.

As part of the change to a deregulated energy market, prices were no longer fixed by the government. Companies were instead encouraged to compete to attract customers. With that competition came fewer rules from the state by which each of these players in the energy market had to abide.

Unfortunately, this system created incentives for energy companies to cut corners and invest as little as possible in order to maximize their profits. It would be easy to just blame the energy companies for doing this, but it is the system that the state created that is truly to blame. When electric generators are told they should take certain actions, like winterizing their power plants, but that simply remains a suggestion, then most companies will not do so out of fear that their competitor will choose not to and ultimately make more money or attract more customers.

The free market functioned relatively well, creating great wealth and a vibrant middle class, before deregulation was promoted by President Jimmy Carter and thereafter more robustly by President Ronald (6) Wilson (6) Reagan (6).  As deregulation and its first cousin, privatization, gained steam, the size of the middle class declined and income inequality grew.

Even now, as the Never Trump contingent of the GOP decries the Trump wing for its racism, xenophobia, denial of global warming and other scientific realities, and attack on democratic norms, there remain three conservative nostrums which never can be challenged.

One is "pro-life" and another is "cutting taxes," euphemism for slashing corporate taxes and income taxes of the wealthy. The third is an attack on regulation.  Democrats will advocate for reproductive freedom and periodically assail Republicans for their fealty to tax cuts for the wealthy. But notwithstanding the few progressive critiques now being made of the deregulation of the energy market in Texas, rarely does any Democrat, and nary a progressive, challenge deregulation in general. The obsession with maintaining "free markets"- with as little regulation as possible- continues. The cost to consumers and the public in general is incalculable.

The unquestioning rhetorical devotion to a free market is a major stumbling block to efficient and productive regulation. The donor class, which reinforces the GOP's ideological commitment to deregulation, desensitizes Democrats to the danger it poses to the middle and lower classes In the long run, this obsessive commitment to "free markets, as the disaster in Texas reveals, can be devastating.


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