Later On

A blog written for those whose interests more or less match mine.

The foolishness of libertarianism writ large in the failure of the Texas power grid

with 2 comments

Libertarians promote the idea that the free market, if “unfettered” (their idea) by regulation, will efficiently address and solve problems that arise in society, thus obviating the “burden” (their idea) of government  intrusion.

Thus the Texas power grid was carefully constructed so that Federal regulations and requirements would not apply (the grid does not cross the state line), and thus in Texas (a power-rich state) the free market would provide all the regulation that the power grid requires.

We see how that worked out: utter failure and dozens dead and among the survivors some facing electricity bills for the past few days of thousands of dollars — one 63-year-old Army veteran living on Social Security faces a bill of $16,752, which will wipe out his savings.At least he lived. A Vietnam veteran died in his truck with his last tank of oxygen because he had no power.

But a Texas economist explained that those higher bills shows that the system is working: as the supply of electrical power dropped, the cost of power increased, and that’s good because (a) it encouraged people to cut back on usage, and (b) it encouraged power companies to provide more power. That in a nutshell is the libertarian argument — that market incentives will result in appropriate action — and though it seems logical, it fails in the face of experience. Not only did no more power become available, people who cut back received enormous bills or — for those who “cut back” because no power was provided to them — in some cases died as a result. While an economist might see the logic of the market as working, the public was penalized. (See this article.)

Indee, those free-market incentives are exactly what created the problem: the Federal government pointed out the need for winterizing equipment and power stations, based on the experience Texas had in 2011, but because Texas does not allow regulation, the government could not require that power companies take this step — and since taking the step would cut into profits, none of the companies did. Responding to the free market rather than to government regulation, they cut costs as much as possible so they could compete with other cost-cutting companies and rake in profits.

Regulations would have forced all companies to winterize (and thus kept the playing field level in terms of competition), but  libertarians don’t see a constructive role for government, and in Texas this sentiment meant that the government was powerless to do anything but make recommendations, and the power companies ignored the recommendations.

Now, I imagine, the power companies will say that “no one could have foreseen” such a cold snap — despite the obvious fact that it indeed was foreseen tot he extent that the government strongly recommended (and would have required, had Texas allowed such things) that companies be prepared for it.

Witnerization requirement:

In 2011, millions of Texans lost power during the Super Bowl, which was played in a Dallas suburb. Two agencies, the Federal Energy Regulatory Commission and the North American Electric Reliability Corporation, conducted a study on how Texas could “winterize” its energy infrastructure.

Of the 2011 storm, the report said generators and natural gas producers said they had “winterization procedures in place. However, the poor performance of many of these generating units and wells suggests that these procedures were either inadequate or were not adequately followed.”

But there was no broad move to winterize equipment. Since then, bills requiring energy producers to hold more power in reserve or ordering a study of how to better prepare for winter failed in the Republican-controlled Texas House.

Texas lawmakers deregulated the energy market in 2002. Supporters say this lowered energy prices statewide, but critics say it gave producers leeway to avoid

The system worked” – Libertarian logic applied to life

William W. Hogan, considered the architect of the Texas energy market design, said in an interview this past week that the high prices reflected the market performing as it was designed.

The rapid losses of power — more than a third of the state’s available electricity production was offline at one point — increased the risk that the entire system would collapse, causing prices to rise, said Mr. Hogan, a professor of global energy policy at Harvard’s Kennedy School.

“As you get closer and closer to the bare minimum, these prices get higher and higher, which is what you want,” Mr. Hogan said.

Storm deaths:

Harris County emergency officials reported “several carbon monoxide deaths” in or around Houston and reminded people not to operate cars or gasoline-powered generators indoors. Authorities said three young children and their grandmother, who were believed to be trying to keep warm, also died in a suburban Houston house fire early Tuesday. In Galveston, the medical examiner’s office requested a refrigerated truck to expand body storage, although County Judge Mark Henry said he didn’t know how many deaths there had been related to the weather.

Moving on:

Never have we been so happy to see the sun. After nearly a week of snow, ice and bitter cold, we were ready to move past the winter storms of last week.

By now, most of the ice is melted and the snow is gone. Power is being restored to the last few homes without it. Life is picking up.

Except life is not picking up for those who died as a result of the power failure. Their lives are over, cut off because Texas thinks government regulation is always bad.

Written by LeisureGuy

22 February 2021 at 10:00 am

2 Responses

Subscribe to comments with RSS.

  1. Sadly, the cult is unbreakable. You can’t kill enough people to get their attention.

    danielwalldammit

    22 February 2021 at 10:02 am

  2. I tend to agree — the adherents generally are unmoved by argument because the logic of their position seems to them so unassailable. But as Oliver Wendall Holmes, Jr., observed in a specific context, “The life of the law has not been logic: it has been experience.” Logic must defer to experience, and however nice the logic, it is worthless if it does not deliver the truth as we experience it. (Cf, in physics, the double-slit experiment). Just as sports work better with referees, so businesses function better (for their investors and for the public) with government oversight.

    The Texas power experiment shows that as clearly as the Brownback Kansas experiment showed the benefit os taxation to fund a functioning government. In both experiments the libertarian approach failed ignominously.

    LeisureGuy

    22 February 2021 at 10:20 am


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.