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My Own Reasons to Favor the Recall-Continued

What went wrong and whose fault was it?

We need to remember that the ridiculous energy bill, that also was mismanaged, was passed on Governor Wilson’s watch. The bill was passed unanimously. That means that it is the fault of both major parties. Most of those folks are still in one office or another. We should remember that at the next election.

But what went wrong? Simply put, Socialism failed. This is a crisis caused by socialist mismanagement. The PUC was the major culprit. As well as being an immoral philosophy of collective theft, socialism flunked Econ 1A! Supply and demand still work fine even under socialism.

If you will pay any price for a commodity, count on it, you will find someone to sell it to you—but you won’t like the price!

If we had put a cap on the prices we would pay energy suppliers, then it would have been necessary to have rolling blackouts. That would have been terrible, but not as bad as what happened! If we had scheduled them, that would have moderated their impact. That would have been similar to the regulation of demand by inconvenience instead of price. We used to laugh at the Soviet Union for their long lines, but it was basically the same idea.

Now this would have been a terrible solution, but it would have been temporary, would not have left us with a mountain of debt and over-priced energy contracts, and would have softened the blow to the energy companies. This is because state mandated lower demand would have lowered prices. This notion was rejected because of the immediate political price that would have been paid for it.

The next idea was to make an outright theft of the property of the electrical utilities by seizing them. This is not out of character for a socialist, but it was a mode of theft to which we were not accustomed. And it would have been successfully challenged legally. Socialists have “nationalized” property, but no State has done something similar successfully. The only way a State can seize property is by convicting some one of a crime or getting a civil judgment against them.

Instead, the Governor and the PUC followed another strategy. Using the regulatory power of the PUC they placated consumers and their so-called ‘advocates’ by keeping energy prices artificially low. Then they passed the ridiculously high prices that the energy malregulation bill mandated onto the energy companies. This was using a combination of government regulation and the market to steal from California energy companies.

They also tried to urge conservation measures on the populace. This succeeded in reducing demand somewhat, but not sufficiently to avoid paying the ruinous prices that the energy malregulation mandated that we be willing to pay.

The energy malregulation system forced us to pay any price necessary to get energy on the “spot market.” Because of this mechanically regulated and hence predictable policy, we were taken to the cleaners fair and square by market manipulation. They say a fool and his money are soon separated. We were fools. We were fools to trust our socialist legislature and governor to devise a rational system.

Our energy malregulation policy inflicted such a policy on us. We had no sales resistance built into the system. Its policy was a matter of public record. Under these conditions, it was only a matter of time before someone took us to the cleaners.

All this was to avoid paying an immediate political price. It sure doesn’t seem to have averted a very serious delayed political price—the recall of the Governor! And that is only just.

This tactic of theft only lasted as long as the bankrolls of the energy companies lasted. Some energy companies went bankrupt. That forced the State to start buying the power for the energy companies. This was all because of an unwillingness to restrict energy demand by higher prices which was within the power of the PUC. So we were sliding into debt at a great rate. The State, unlike the Federal Government, didn’t have a quasi-regulated, privately owned, money machine, like the Federal Reserve to back it up.

So then the only solution was to negotiate long-term contracts for energy. We were not exactly in an advantageous bargaining position! That is a severe understatement. Not only that, it turns out that the Governor’s chief negotiator had a conflict of interest! Whether it affected the ridiculously high prices we ended up promising to pay in long-term contracts or not I don’t know.

The good news is that this alleged conflict of interest may give us legal grounds to challenge these contracts. But the Governor couldn’t bring himself to allege malfeasance by his own agent! Any replacement Governor will not face a similar hurdle. If that replacement Governor has the will, he can at least try to use this argument in court. Whether it will succeed or not, I don’t know. However, 40 billion plus in disadvantageous contracts sure gives us an incentive to give our feckless Governor the old heave ho!


There were more ins and outs to this story of course. The difficulty of building plants quickly enough was one of them. Again this was the combined fault of governments and self-centered interest groups who said either “Not in my backyard!” or, if they were environmental extremists, “Not in any backyard!”

Another part of the story was a holding company set up to avoid liability by utility company stockholders. It made sense. Utility companies were forced with a gun at their head to sign contracts under the crazy malregulation that even the dimmest capitalist could see had a real vulnerability to a supply crisis caused by a heat wave in summer or a cold snap in winter. It was like the body walling off an infection in a cyst in order to survive.

One more part of the plot was forced divestiture of transmission facilities. Without a guarantee of a sufficient return to make capital investments and pay a reasonable return to shareholders, it was inevitable that there would be a problem like the one the Northeast recently suffered, for exactly the same reason—no sufficient incentive to build new transmission facilities. Obtaining rights of way for transmission lines was also a problem.

There you have it—the sad and cautionary tale of the California Energy Crisis—which was a great part of the origin of the current deficit crisis. But as bad as the Energy Crisis was in its effects on the budget, it is not the whole story.

The Governor, remember, is armed with a mighty power—the line item veto. Because of the 2/3rd requirement to pass budgets, he could have given cover to members of his own party to resist its profligate spending habits and if it didn’t, then he could have gutted their budget with the line item veto!

But the Governor’s leadership on the budget wasn’t any better than in the Energy Crisis. In fact, just as in that case, he contributed to the problem, not to the solution. By yielding to public employee unions, he raised State personnel costs and liabilities to the skies. The prison guards and state worker pensions were the two main culprits. This was simply put a sell-out of the public interest, to the public employee interest. Of course by now the Governor’s insatiable appetite for campaign funds and his continual sell-out of the public interest, to any bidder is as well know as his dirty campaign tactics and vicious tongue.

The Energy Crisis, the Budget Crisis, and Political Corruption together are surely sufficient to justify a recall. We can indeed justify a recall without even mentioning the Workers Compensation mess that has been abuilding for many years for which the Governor cannot claim sole blame indeed. Integrity, courage, and vision have been sorely lacking in this Governor. It is time for him to go.


"For the prophecy came not in old time by the will of man: but holy men of God spake as they were moved by the Holy Ghost."     2nd Peter 1:21