I like Daniel Hannan’s analysis and his position on matters political. From 1999 to 2020 he was a Member of European Parliament (MEP) for South East England. Here’s a short opinion piece he published yesterday at the John Locke Institute website.
“Free trade, the greatest blessing a government can bestow on a people, is in almost every country unpopular”, wrote Lord Macaulay in 1824. Since then, average global incomes have risen, at a conservative estimate, by 3,000 per cent – having previously barely sloped upwards at all. Globalisation and open markets have been miraculous poverty-busters. Take any measure you like: literacy, longevity, infant mortality, female education, calorie intake, height.
Yet, in thrall to our Palaeolithic instincts, we still refuse to accept it. We deny the evidence of rising prosperity; or else we tell ourselves that rising living standards come at a terrible cost, that society has become soulless and materialistic, that something is missing. Every protest movement against the modern liberal order – romanticism, existentialism, fascism, communism, religious fundamentalism – is a tortured cry from our inner caveman, yearning for the collectivism and authority of the kin-group.
As we haul ourselves from the pupa of lockdown, we find we are subtly transformed. There is more demand for authoritarian governments of both Left and Right. There is more protectionism, and thus more poverty. There is less tolerance of dissent. There is more identity politics – the ultimate form of collectivism, because it defines people, not as individuals, but by group.
His conclusion is bleak:
Let’s acknowledge that capitalist moment, when reason overcame dogma and when ordinary people came to enjoy lifestyles that mediaeval kings could not have dreamt of. It was an achievement made all the more remarkable by the fact that hardly anyone understood or appreciated it. Its beneficiaries remained suspicious and hostile to the end. Only now, perhaps, as we revert to our natural condition, do we appreciate what we are losing.
C’est la vie.
Life is a Random Draw 
I have a suspicion that if we look hard enough we can find the following opinion repeated every decade by someone prominent and yet it has not come to pass.
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Wanted to know what conclusions can be drawn from this piece from today’s WSJ:
Nearly 20 years ago, Texas shifted from using full-service regulated utilities to generate power and deliver it to consumers. The state deregulated power generation, creating the system that failed last week. And it required nearly 60% of consumers to buy their electricity from one of many retail power companies, rather than a local utility.
Those deregulated Texas residential consumers paid $28 billion more for their power since 2004 than they would have paid at the rates charged to the customers of the state’s traditional utilities, according to the Journal’s analysis of data from the federal Energy Information Administration.
The crisis last week was driven by the power producers. Now that power has largely been restored, attention has turned to retail electric companies, a few of which are hitting consumers with steep bills. Power prices surged to the market price cap of $9,000 a megawatt hour for several days during the crisis, a feature of the state’s system designed to incentivize power plants to supply more juice.
None of this was supposed to happen under deregulation. Backers of competition in the electricity-supply business promised it would lower prices for consumers who could shop around for the best deals, just as they do for cellphone service. The system would be an improvement over monopoly utilities, which have little incentive to innovate and provide better service to customers, supporters of deregulation said.
WSJ News Exclusive | Texas Electric Bills Were $28 Billion Higher Under Deregulation
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Tanay,
The conclusion to be drawn from the WSJ piece is that the WSJ is full of sh*t in this case if they imply that deregulation of the utilities is to blame for the Texas disasters. If the claim is that regulation of utilities, as opposed to letting the consumers and producers of electricity determine through markets how electricity should be generated and delivered to users, is proper then one has to prove that the regulators know what is in principle unknowable. In the face of unavoidable uncertainty (not just risk), the proper attitude is that of epistemic humility. That means, no one knows what the future holds in store and therefore regulators are equally in the dark as market participants. At least the market participants have “skin in the game” and the regulators are just as clueless as everyone else but because they don’t have skin in the game are more likely to impose costs on others that they don’t pay if they err.
I also agree with Prabhudesai’s take on this matter.
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That entire WSJ article is what people call tilting the windmill.
Firstly, that $28B is pure nonsense. It is like saying people in England pay zero for healthcare. The bill at the hospital checkout might be zero but everyone has paid for it and perhaps lot more than what they would have paid out of pocket in the absense of NHS.
California despite good weather and not weird demand patterns pays around $0.20c per unit where as Texas pays $0.08c per unit. This is the only metric that matters. California’s electricity which is highly regulated is a mess. PGnE has burned down thousands of acres of forests, caused multiple day blackouts and all this without any major natural event like storm.
What Texas faces was unprecedented. Texas is a hot place and as climate change people tell us it is only going to get more hotter. All powerplants were designed to hit peak load in summers and not winter. The winter storm was a surprise. Some damage was expected but eventually Texans managed pretty well.
I have not seen any evidence that government regulated utility companies are better prepared for disaster. At least in California opposit is true and in the heart of silicon valley were are relying on some serious backup batteries (just visit a costco).
WJS or others need to provide more credible evidence as to whether the government controlled utility services would have worked better or cheaper.
Read more here : https://reason.com/2021/02/22/the-texas-blackout-blame-game/
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Prabhudesai,
1. The $28B difference is between deregulated retailers and local utilities, both within Texas. Not TX and CA.
2. Colder states don’t have this issue. “Texas’ deregulated electrical system incentivized the cheapest production without accounting for resilient machinery“.
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See my England NHS analogy. What people paid is not as relevant as the actual cost of the per unit of energy. Perhaps the traditional utilities are cheap because they don’t serve as many people, do not provide better service or reliability. (I am looking at PG&E in California. They are absolute shit.)
Yes because everyone knows they are cold and hence everyone is prepared for it including the powerplants. Even homes are built with proper insulation and people also carry alternative sources of heat. Texas is a hot state, when a cold wave hits it, it is expected that their systems wont be as well prepared.
Note that the heavily regulated PG&E in California is not prepared even for a normal day leave alone extreme winter and summers.
Deregulation incentivizes power companies to react to people’s demands rather than fatwahs of some deranged smartypants in the capital. If Texans valued cheaper energy for decades, but in return were totally fine with their power companies not prepared for once in 50 years winter storm, it makes sense.
But, I bet that after this incidence, all the power companies will upgrade their infrastructure to be far better prepared (because consumers would prefer that sort of service assurance.)
The storm has not killed Texans but has made their “deregulated” system far more resilient for future events like these.
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