Browsing the blog archivesfor the day Tuesday, July 25th, 2006.

Power and Free Markets

Bush Administration

Matt Stoller writes at MyDD:

All over the country, America is enjoying a series of free market blackouts. California, New York City, and St. Louis have all been hit with electricity outages due to a poor electricity infrastructure. This infrastructure is a result of a reliance on a free market and tax cuts instead of public infrastructure investment.

Ian Welsh writes at BOP News:

As of this writing there are power outages in three parts of the country – St. Louis, New York and California.

The St. Louis one looks unavoidable. The other two look avoidable.

Third world country. Some things either need to be run by the government, or need to be highly regulated. Among those things, electrical power, which is a natural monopoly if anything is, stands near the front of the line.

This is what free market fundamentalism gets you.


Remember the Great Blackout of 2003? When we learned the electricity grid is old and fragile? Has anything been done to correct this situation? Not that I’ve heard.

But then there’s Kate O’Beirne. After the 2003 blackout she said on CNN’s “Capital Gang”:

SHIELDS: … the argument that was made by — for deregulation was, it would keep the rates lower. Now…

KATE O’BEIRNE, CAPITAL GANG: Well, the cost of energy to consumers has been kept much lower by deregulation. That’s not been true of the infrastructure and the grid…

FAZIO: That’s right.

O’BEIRNE: … because that remains regulated and…


NOVAK: … regulate it.

O’BEIRNE: And it discourages the kind of the private investment it needs.


O’BEIRNE: So further deregulation happens to be the answer.

I remember what O’Beirne said because it was so colossally stupid I never quite recovered. I wrote at the time (Note: some links had expired; substitutes provided where possible):

Let’s look at O’Beirne’s underlying assumptions — first, “The cost of energy to consumers has been kept much lower by deregulation.” This would be big news to folks in California. California was the first state to deregulate (in 1966) and today Californians are paying twice as much for power as they did before.

Her other assumption is that regulation discourages private investment. In the case of the electricity grid, just the opposite is true.

    Today’s grid was built up over the last several decades by individual utilities across the country going through complex proceedings with local, state and federal officials for permission to build transmission lines. Rates were regulated during most of that time, so utilities were virtually assured of getting back the money they invested in power lines.

    The financial and regulatory environment is much different now that the market has been deregulated, and the uncertainty has left utilities unwilling to make the kind of long-term commitments that are needed. [Akweli Parker, “Why Power-Grid Experts Were Not Surprised by Blackout,” The Philadelphia Inquirer, August 17, 2003]

Building infrastructure is an enormous capital investment that can take a long time to pay off, and the magic of the marketplace doesn’t change that. And deregulation puts more stress on energy infrastructure because it creates regional and national markets that require moving power over long distances.

    “We’ve got excess power in upstate New York, but there’s no way to get it to New York City because of the bottlenecks,” said Denise VanBuren, vice president of Central Hudson Gas & Electric, which supplies power to eight counties north of New York City. “It’s very difficult in this economy to get financing for a major transmission line, and we’ve been concerned for a long time about the region’s transmission capacity.” [David Firestone and Richard Perez-Pena, “Power Failure Reveals a Creaky System,” The New York Times, August 15, 2003]

If you read nothing else about deregulation today, be sure it’s this article by Robert Kuttner in yesterday’s New York Times

    But deregulation hasn’t worked, for three basic reasons. First, there is a fairly fixed demand for electricity and generating capacity is tight, so companies that produce it enjoy a good deal of power to manipulate prices. The Enron scandal, which soaked Californians for tens of billions of dollars, was only the most extreme example. California authorities calculated that a generating company needed to control just 3 percent of the state’s supply to set a monopoly price.

    Second, the idea of creating large national markets to buy and sell electricity makes more sense as economic theory than as physics, because it consumes power to transmit power. “It’s only efficient to transmit electricity for a few hundred miles at most,” says Dr. Richard Rosen, a physicist at the Tellus Institute, a nonprofit research group.

    Third, under deregulation the local utilities no longer have an economic incentive to invest in keeping up transmission lines. Antiquated power lines are operating too close to their capacity. The more power that is shipped long distances in the new deregulated markets, the more power those lines must carry. [Robert Kuttner, “An Industry Trapped by a Theory,” The New York Times, August 16, 2003]

Yes, Kate O’Beirne, further deregulation is just the ticket. Spoken like a true pundit.

In his post today (linked above), Matt Stoller apparently caught some wingnut comments. He added:

Update: I’ll clarify a bit for the idiots who think I’m against a free market and cleverly call me comrade. Markets are good things in areas of society where there’s a private resource allocation problem, like consumer goods. Privatizing public services – like transportation, electricity, water, disaster relief, warfare, and some parts of telecommunications – is not only stupid, it’s extremely inefficient and leads to people dying and suffering in all sorts of needless ways. Also, the idea that privatizing public services and underinvesting in public infrastructure is free market anything is stupid, but then, I’m not the one who’s been abusing the free market language for forty years. Anyway, enjoy your blackouts.

Like I said in the “Child’s Play” post below, righties tend to “gravitate toward simple, magic-bullet solutions that will perfectly solve problems.” And then they cling to that solution with blind faith, never mind it’s not working.

I just heard on NBC news that 38 people have died from the California heat wave.

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The Fantasy Lives of Chickenhawks

blogging, conservatism

I bet they have imaginary friends, too.

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Child’s Play

Bush Administration, Middle East

Last week on MSNBC’s “Hardball” David Ignatius said,

President Bush in that comment that was picked up by the microphone, talks as if diplomacy is a little spigot you can turn off and on. Let‘s send Condi. Let‘s pick up the phone and let‘s have Kofi do this. It doesn‘t work that way. It requires sustained engagement over time. And that‘s been missing. We‘re paying the price for it.

Bushies don’t do diplomacy. Or, as Laura Rozen writes in Salon (ad-free at True Blue Liberal) the Bush Administration’s foreign policy “experts” — Condi et al. — seem to think “diplomacy” means only talking to people you like.

Increasingly, some former U.S. policymakers and diplomats, including self-described conservatives, are losing patience with the Bush administration’s allergy to talking, and are challenging its underlying assumption. The rationale for not talking to rogue regimes and extremist groups is that it rewards or legitimates them, demonstrates appeasement, and therefore sets back U.S. security interests.

“In diplomacy, you do not negotiate peace with your friends,” says former Undersecretary of State for Near Eastern Affairs Edward Djerejian, who served as ambassador to Syria and Lebanon during the George H.W. Bush administration. “You negotiate peace with your enemies and your adversaries. That is one of the highest tasks of diplomacy.

“In the Arab-Israeli equation, people often say we have to put pressure on the parties to make peace,” Djerejian continued. “There’s some truth to that. At the same time, you have to deal with all relevant parties in order to obtain the political buy-in and chart out the common ground to make necessary compromises to come to an agreement. For that, you need dialogue and muscular diplomacy.”

Condi, for example, will not talk to representatives from Hezbollah. Instead, she wants the Saudis to talk to Hezbollah. She’s trusting the Saudis to represent America’s interests, in other words.

The Right didn’t use to hate diplomacy. For example, President Reagan’s Secretary of State, George Shultz, persuaded Reagan that it was OK to talk to the PLO. However,

In fact, it was during the Reagan administration that the schism between neoconservatives and realists on the subject of diplomacy first became apparent. As Rick Perlstein, author of a book about Barry Goldwater and a forthcoming one on Richard Nixon (and a political liberal), points out, some on the right were calling Reagan unprincipled for negotiating arms control agreements with the Soviet Union and not providing more backing for the Polish Solidarity movement. “It’s a founding narrative of the modern right,” claims Perlstein. “It is built into the right-wing characterological DNA.” With the ascendancy of the neoconservatives in the Bush administration, the non-talkers seemed to have won the battle on the right.

What is it with neocons and reality? You can argue whether Reagan should get primary credit, but, in fact the Soviet Union did collapse and pass into history on just after his watch. This seems to me to be empirical evidence that Reagan’s approach vis-à-vis the Soviets was correct.

Neoconservatives like Patrick Clawson of the Washington Institute for Near East Policy see their approach as pragmatic, not ideological. “The problem with talking to rogue states is that we don’t get anywhere with them,” Clawson told me. “In particular, Syria’s Bashar al-Assad repeatedly lied to us. We go, get a promise, and then nothing happens. On [former Secretary of State] Colin Powell’s first trip to the Middle East, Assad directly lied to Powell about whether Iraqi oil products were flowing through Syria.” With “three big rogue states,” concludes Clawson, meaning Iran, Syria and North Korean, “it just doesn’t work.”

But talking can be OK, as long as it’s done with a baleful countenance, and the party across the table is suitably intimidated. “As for Syria, the question is, we want this crisis to end with a change in Lebanon, with Hezbollah under a different station than now,” says Joshua Muravchik, of the American Enterprise Institute, a neoconservative Washington think tank. “And I have always been categorically against appeasement or concessions to miscreants. But I don’t think talking to someone is per se appeasement or concession. If our attitude toward Syria is what I think it ought to be, more threatening than supplicating, then I am perfectly happy to talk with them.”

Does this strike you as being childish?

Yesterday Martin Woollacott posted an essay called “The New World Immaturity” on The Guardian web site. Woollacott argues that too many nations of the world, western and Muslim, are being governed by adolescents who neither accept constraint on their actions nor understand that actions have consequences. As an example of adolescent thinking he presents Newt Gingrich, “oddball theorist and burnt out American political comet,” who is certain that World War III has begun.

… we know from history that radical and terrorist movements can evolve into more normal political entities, with less extreme aims. This is what may have been in the process of happening to Hamas in the occupied territories. It is not out of the question that it could happen to Hizbullah. But not for Newt Gingrich, who has already cast them in the role of permanent adversaries, along with their Iranian masters.

Gingrich brings us back to the American branch of the unilateralist regression in its worst form. It can’t see difference, it can only see opposition. And, while it is drawn to the principle that the world’s leading nation has a duty to consider everybody’s interests, it is also dangerously attracted to the idea of flattening its enemies in some apocalyptic showdown. The science fiction addict Gingrich has read Robert A Heinlein’s Starship Troopers one too many times.

And Woollacott reminds us of what worked during the Cold War:

[George] Kennan’s main point was that containment was better than war. But it is equally important to recognise that different views and plans about the future of the world can’t be blasted out of existence but have to be lived and negotiated with until, as happens often enough, they change.

Gingrich, at least, isn’t running anything but his mouth these days. Instead, we’ve got the Juvenile-in-Chief George W. Bush, as described by Eugene Robinson:

Just my luck. I go away on vacation and it happens to be the week when George W. Bush’s strategic view of the current world situation is revealed: Russia big. China big, too. World leaders boring. Lady world leaders need neck rub. Terrorism bad. Elections good (when the right people get elected). Israel good. Time to go home yet?

Might as well have chosen a President by picking out the snottiest kid in Mrs. Jones’s tenth grade homeroom.

The role of any American president and secretary of state should have been to move quickly to bring hostilities to an end. Instead, Bush all but egged the Israelis on, and Condoleezza Rice went so far as to reject the idea of a cease-fire. Belatedly, she has flown to the region with no real credibility as an honest broker. Her words of concern about the “humanitarian crisis” in Lebanon ring hollow.

But this administration doesn’t want to be an honest broker in the Middle East. Bush and Rice have staked their Middle East policy on a single incontrovertible idea — that terrorism is bad — and it has led them to the mistaken notion that Israel can achieve long-term security by creating a kind of scorched-earth buffer zone in southern Lebanon. …

… Bush, Rice et al. refuse to see that their crusade against terrorism can never be won by military action alone, because a victory in the war of arms can also be a defeat in the war of ideas. Lebanon was moving — imperfectly but unmistakably — toward becoming the kind of society we paint as a model for the Arab world, a secular democracy with a modernizing economy. Now billions of dollars’ worth of infrastructure are in ruins and the country’s most promising industry, tourism, has effectively been obliterated. It will be some time before Beirut is anyone’s first choice for a holiday of sun and fun.

Condi talks about a “sustainable” cease fire. But what’s not sustainable is the use of force as the sole means of enacting policy. As Iraq should be teaching us, military resources are finite. I say should be; neocons don’t seem to be learning. Last week leading neocons Michael Ledeen, David Horowitz, and William Kristol called for American intervention against Syria and Iran. With what, dears? Sticks and stones? Last month alone the war in Iraq ate nearly $10 billion taxpayer dollars. Senator Russ Feingold said last year,

Make no mistake, our military readiness is already suffering. According to a recent RAND study, the Army has been stretched so thin that active-duty soldiers are now spending one of every two years abroad, leaving little of the Army left in any appropriate condition to respond to crises that may emerge elsewhere in the world. In an era in which we confront a globally networked enemy, and at a time when nuclear weapons proliferation is an urgent threat, continuing on our present course is irresponsible at best.

We are not just wearing out the troops; we are also wearing out equipment much faster than it is being replaced or refurbished. Just days ago the Chief of the National Guard, General H Steven Blum, told a group of Senate staffers that the National Guard had approximately 75% of the equipment it needed on 9/11. Today, the National Guard has 34% of the equipment it needs. And the response to Hurricane Katrina exposed some of the dangerous gaps in the Guard’s communications systems.

What we are asking of the Army is not sustainable, and the burden is taking its toll on our military families. This cannot go on.

Neocons think of the U.S. military the way a spoiled rich juvenile thinks of Daddy’s money — it’s inexhaustible. No matter how much you waste, there’s always more. And no matter what kind of trouble you get into, Daddy’s money/use of force will get you out of it.

Like children, neocons gravitate toward simple, magic-bullet solutions that will perfectly solve problems. But as Nick Kristof said in today’s New York Times, “one of the oldest lessons in international affairs is that not every problem has a neat solution.” And children need to learn they won’t always win, and they can’t always get their way, no matter how big a tantrum they throw.

And then there’s the neocons’ absolute, childlike faith in their beliefs and in themselves. As Eugene Robinson says (emphasis added):

I felt better when I thought the Decider didn’t have a worldview, just a set of instincts about freedom and democracy. But even if you set aside the president’s embarrassing open-mike performance at the Group of Eight summit, which is hard to do, events of the past week show that this administration actually thinks it knows what it’s doing. Bush and his folks haven’t just blundered around and created this dangerous mess, they’ve done it on purpose. And they intend to make it worse.

Fred Kaplan writes,

It’s not so much the blithe arrogance that’s troubling—the belief among many top Bush aides that they can ignore history and culture, that they’ve hit upon the magic formula that has eluded countless others. (After all, every president deserves a shot at making “enduring peace” in the Middle East.) It’s the stunning confidence in this belief—held so deeply that they’re willing to push ahead with their vision even at great sacrifice of political stability and human life.

So far, have the Bushies gotten anything right?

H.D.S. Greenway writes in today’s Boston Globe,

Whenever I hear the Bush administration talk about a defining moment, I tremble. For it would appear that the neoconservative ideal that Middle East violence can somehow bring about a more favorable situation for the United States and Israel has not died in the wreckage of Iraq.

Greenway (and Kaplan, and Kristof, and Robinson, and others) explains why Bush’s and Israel’s policies will make the Middle East less stable and Israel less safe in the long run. Yet the children, who cannot see the world through adult eyes, assume that those of us who don’t support Israel’s attacks on Lebanon are just bad people. The persistently immature Dennis Prager writes,

Amos Oz and James Carroll are men of the Left who have been tested and passed the most clarifying moral litmus test of our time — Israel’s fight for existence against the primitives, fanatics and sadists in Hezbollah and Hamas and elsewhere in the Arab/Muslim world who wish to destroy it. Anyone on the Left who cannot see this is either bad, a useful idiot for Islamic terrorists, anti-Semitic or all three. There is no other explanation for morally condemning Israel’s war on Hezbollah.

He cannot grasp that some of us are opposed to Israel’s actions because we want what’s best for Israel. And Lebanon. And us, too, for that matter. Just as, before the invasion of Iraq, our concerns about what could go wrong for the U.S. as well as Iraq (all of which turned out to be accurate) were dismissed by the all-purpose explanation: “You must be a Saddam lover.”

You can’t talk to these people. Which explains why Bushies don’t do diplomacy.

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