The Small Picture
Price controls are myopic.
Myopia is a condition of the eye when the cornea or lens is too curved for the length of the eyeball. It results in being near sighted.
Myopic has also become a term used to describe people and ideas whereby a narrow view of a situation or problem dictates their emotions, decision-making and actions. On the surface it’s easy to imagine how this condition can be dangerous.
A myopic view doesn’t see or consider anything else. It can become an obsession. If a person takes on myopic view of something s/he has little or no tolerance of other views. It’s obvious to those espousing a myopic view that they believe what they see and that’s all anyone needs to see. They can’t understand how anyone could see things differently than they do.
America is full of myopic views. They form the basis for numerous mindsets on numerous subjects.
A few that quickly come to mind are “safe spaces” on our campuses, Medicare for All, monetary reparations for black people, “social justice,” equity, the discrimination exemplified by women earning less than men, Keynesian economics, a national minimum wage and most recently – the utopian theories of socialism.
But let me get back to where I started while focusing on the California politicos’ myopic views on price controls. They narrowly think they’re smarter than everyone else and particularly smarter than the free market.
Those so-called representatives of the people of California are comfortably woke on climate change and think they are “leading the way” to produce electricity and solve climate change with carbon-neutral resources.
They’ve been supportive of the Green New Deal proposition and are proud they’ve been on that train for a number of years.
After all, they know/knew all it takes is to understand the ‘crisis’ – and then have the courage to pass the legislation necessary to mitigate it.
Naysayers of their direction, policy and laws were simply climate change deniers who have nothing positive to offer and have been silenced.
To get the full picture, we start in 1998. The California Public Utility Commission, acting in concert with legislation, set the rates all six of the state’s electric companies could charge customers while requiring them to provide as much power as the customers wanted.
Initially this one-sided mandate of rates worked OK because the initial rates allowed the companies to operate at a profit. But by 2001 the cheaper electricity the companies were buying from hydroelectric plants was not available. Since the companies did not have the generating capacity to meet demand without hydro, they had to buy much higher cost electricity on the open market. The largest electric company, Pacific Gas and Electric Company (PG&E) filed for bankruptcy. The state was on the hook and had to pay dearly to get it out. In 2012 PG&E – then the largest utility company in the country – filed for bankruptcy again. The state had to help the company pay off some $40B to creditors and allowed the company to raise rates again to repay the state. So, artificially set low rates established by the state legislature and governor resulted in much higher rates.
Then in 2018 the state experienced two devastating wildfires. Rolling blackouts ensued. PG&E was assigned blame and liability for the fires and was extensively fined. So, in January 2019 it filed for bankruptcy for the third time in 19 years.
To make matters worse the legislature then adopted something called the Renewable Portfolio Standard which requires all electrical power generating companies, by 2030, to deliver electricity using 60% renewables. Wouldn’t it be wonderful?
In addition to the plethora of ignorance surrounding “woke over free market” syndrome, the cost of electricity is even higher for business and industry – 61% higher than the U.S. average. Residential rates are 42% higher than the national average.
Then to top it off while “fixing climate change,” the state instituted a cap-and-trade program in multiple sectors that required companies to pay fines if they emitted too much carbon. For the electric companies dependent on natural gas piped in from Texas and Arizona, that cost (the fines) was added to the already high cost of electricity.
With the high and rising cost of electricity, the CA genius’ then passed legislation to ban the sale of CO2 emitting vehicles in the state beginning in 2035. Since it has already created, by far, the highest electrical rates in the country, allowing only EVs (including trucks) on the roads will only increase the demand for electricity by some exponential number, meaning stratospheric costs of energy. And the state’s higher cost of energy will therefore increase the cost of everything else in CA even more.
California’s answer to higher costs? Legislate lower prices for the products of all those price-gouging companies.
Meanwhile the state has run up its own costs while incurring unprecedented debt – in violation of its own state constitution.
“Cutting off one’s nose to spite one’s face” is the expression that comes to mind. It’s used to describe a needlessly self-destructive overreaction to a problem.
Simple.
Simple-minded, that is.
Remind me again – who’s running the myopic asylum in California?
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Have a great and prosperous week.
Hug somebody.
References:
SPIDER Bytes
This week’s trivia question is: Which globally dreaded disease did the World Health Organization declare eradicated in 1980? The answer to last week’s question re: What produces the majority of the breathable air on earth: The Ocean – Phytoplankton. Phytoplankton are microscopic organisms that live on the surface of water. They are so tiny that there could be thousands of them in just one droplet of water. Residing in oceans and lakes, they capture sunlight and turn it into chemical energy via photosynthesis, and, just like trees, they make oxygen by consuming carbon dioxide and releasing oxygen. In addition to making oxygen, they also provide food for other marine life. 50% of the earth’s oxygen comes from these organisms – 28% from trees and plants.
This was the trivia question for this week before he died last week: Who is the American actor who voiced Darth Vader in the ‘Star Wars’ franchise?
The Consumer Price Index rose 2.5% in August from a year earlier and 0.2% from the previous month. The Fed is still expected to cut interest rates a quarter point on Wednesday – to stave off what looks like a recession in the works.
Four SpaceX astronauts successfully walked in space Thursday morning. The two male, two female quartet each had 12 minutes outside the capsule. We still haven’t tested humans for extended time periods in the vacuum of space without the 14.7 psi of earth sea level and inside the ISS. Space suits are pressurized to 4.3 psi.
Here’s a new recyclable – coffee grounds. Some scientists report concrete can be made 30% stronger when coffee grounds are added to the mixture. Apparently coffee grounds at the landfill give off methane which has an earth warming effect greater than CO2.
A team of researchers in Saudi Arabia just made a solar-powered device that draws up to three liters of fresh water from the atmosphere every day without electricity or manual intervention. Similar invention by researchers at Waterloo University in Canada – up to 20 liters a day with a solar device desalinating salt water. The proverbial expression ‘necessity is the mother of invention’ comes to mind.
If you were a college debate coach, you would say Harris won the debate last week. I’m not sure undecided voters are any better informed. The debate was simply a media event and hype – if you listened/watched, it’s all you heard about for weeks prior and since – who won, who lost, and words, words, words and untold time from a bunch of know-it-all pundits and celebrities.
We commemorated 9/11 last week. We all remember where we were when we heard, then saw.
Was Friday the 13th unlucky for you?
Don’t you just love California? With their mandates on EVs, now the state’s 30 million vehicle drivers will soon be paying 30 cents/mile to drive on their roads to make up for loss of gas taxes. I predict will be a growing market for odometer ‘adjusters’ there. Think of all the jobs created for people checking your vehicle’s mileage. That’s sounds a lot like an ‘opportunity economy.’
BTW, the Alta Wind Energy Center located in Tehachapi Pass, Kern County, CA has 600 turbines covering 81 square miles and is the country’s largest so far. Constructed in 2010, it only cost the state $2.8B. What’s a couple billion here or there? I don’t know how it’s taxed for property and whenever the wind blows.
