The Nightmare in Texas Should End the Debate: Deregulation Always FailsPhoto via Getty Politics Features Texas Power Crisis
The complete failure of the power grid in Texas during the recent winter storms that swept the state cost millions of dollars in damage and came with a death toll that won’t be fully known for months. The utter failure of the system can be attributed almost entirely to a statewide process of deregulation beginning in 2004 that has required around 60 percent of Texas residents to buy their power through private companies, which comes at the expense of local utilities. The philosophy behind the move is of the core conservative variety, and is pitched publicly as a way to save money by turning public services and utilities over to the private sector, where the free market will lead to increased competition and lower prices. Implicit in these proposals is a mistrust of the government, which is usually painted as incompetent and bloated—something that is, by its nature, both bad and expensive.
Here’s how that turned out, per a study from Wall Street Journal:
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.
Oops! So much for the “let the customers shop around, it’ll be cheaper!” idea. Along with that gaudy $28 billion total, the WSJ found that customers who are forced into becoming customers of a private utility pay more than those using traditional utilities, and when this month’s crisis hit, so did surge pricing, with many residents now seeing enormous bills as the market price cap rose as high as $9,000 per megawatt hour. As the Times reported, one man owed $16,000 on his latest bill, and he wasn’t an anomaly—these were the “lucky” ones who didn’t lose power! Even in “normal” times, the difference has been stark:
From 2004 through 2019, the annual rate for electricity from Texas’s traditional utilities was 8% lower, on average, than the nationwide average rate, while the rates of retail providers averaged 13% higher than the nationwide rate, according to the Journal’s analysis.
This goes against the promises made by companies like Enron—yup, those guys—and George W. Bush when the initial push for deregulation was happening in the ‘90s. But you’ll never believe what happened: The lack of a public option for many consumers meant that the private companies could collude to raise prices (with an assist from the Republican government, who set laughable upper limits on pricing), and, more pertinently to the year 2021, they had no financial incentive to spend money on infrastructure that would protect the grid during…oh, I don’t know, let’s say a massive winter storm.
If there’s one thing we know about big corporations whose chief aim is profit, it’s that if there’s no profit to be had, no action will be taken. Hence, disaster and death in Texas when the weather turns.
It’s an outrage, and reading about the deaths and the exorbitant costs is the kind of that provokes real anger, but it’s important to remember also that this is not surprising. Whether it’s Texas-style deregulation or the adjacent move to slash taxes, this stuff always ends up the same way, in a complete economic disaster. The so-called “Kansas Experiment,” in which Gov. Sam Brownback committed his state fully to supply-side theory by cutting individual income and business taxes at historic rates, lasted about five years and essentially bankrupted the state. The ensuing cuts to education were perhaps the most prominently covered side effect, but everything from infrastructure to mental health services to…well, you name it…took a massive hit. Meanwhile, the economy simply did not grow as advertised, and in 2017, Brownback’s own party was forced to retreat, and even overrode the governor’s veto in order to stop the bleeding.
None of which stops Republicans from trying the same things over and over and over. Trump’s tax cuts, for instance, were Brownback-lite policies, and destined for the same fate. It happens constantly on local levels—here in North Carolina, there was a big movement starting in 2012 to privatize both the regional airport and the water system in the city of Asheville, and it occurred in the context of huge tax cuts throughout the state initiated by the Republican governor (whose power only ended after he cost the state a basketball tournament when he couldn’t reign in the social conservatives who insisted on passing an anti-trans bathroom bill).
It’s happening all across the country, and you can even see echoes in the rise of for-profit charter schools, which—like the Texas deregulation, or the Brownback tax cuts—deplete resources for public schools. The fantasy here, which is very much coming to life, is a complete torpedoing of any public entity, from schools to utilities, and the total transfer of power to corporations. Integral to all of this, of course, is the decimation of public sector unions, a constant target of ghouls like former Gov. Scott Walker of Wisconsin.
What Texas proves, yet again, is that the reality of this fantasy is, in fact, a nightmare which inevitably ends with people suffering. It tanks the economy, reduces worker safety, and generally promotes a new American dystopia where nobody but the richest people are protected.
With each new failure, I catch myself hoping that the fever of deregulation will break, or at least prompt enough reactionary anger that it can’t be successfully implemented the next time. Routinely, I am disappointed. But perhaps with time and experience, the average American is beginning to learn that despite the propaganda, government services have a fundamental purpose. The whole reason we have a government is for protection, and not just military protection. The protection that’s far more applicable to our ordinary lives is the economic and health kind, which, as we see in Texas, often go hand in hand. The most popular policies in the country, like Medicare and Social Security, tend to be government programs. Even those government programs that are hindered and somewhat compromised by private interests, like the Affordable Care Act, become too useful even for a man like Trump to destroy.
Public utilities, education, roads, bridges and health all fall under this umbrella. When the government is responsible for these key services, you can complain about bureaucracy and bloat all you want, but the result is better than the disaster-profiteering that inevitably emerges when control is ceded to the raptors of profit.