Notes From the Blackout

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Having
just moved to Brooklyn, I was center stage for the "Blackout
of ’03." The most salient feature of the event here was how calm New York City was.
People were wandering the streets of my neighborhood well after
dark (and no, not in order to mug other people). Spontaneous street
parties arose in a number of places. Everyone was talking to everyone
else. Strangers would gather around someone on her stoop with
a transistor radio or sitting in his car listening to the news.
In Brooklyn, even traffic flowed smoothly. At busy intersections
cars pulled to a stop on their own. One driver would wave the
other through. People stopped for pedestrians at crosswalks without
a traffic light or the threat of a ticket to make them do so.
I heard of two minor incidents of looting, both in the worst neighborhood
in the borough. One person in the city died as a result of the
blackout… from a heart attack.

An
exception to the generally civil behavior was the police. The
morning of the blackout (OK, so it wasn’t during the blackout,
I admit, but the story is good so I put it in) a cop pulled in
the wrong way onto our one-way street, parked in front of a fire
hydrant, and ran into the deli. He came back out with a cup of
coffee. My wife expected to see him back out onto the main road,
but no, he just continued down the street the wrong way to the
next intersection. Hey, a man’s gotta have his cuppa joe, don’t
he?

The
evening of the blackout, a local Italian restaurant was doing
booming business selling pizza: their oven was gas-powered and
therefore operational. A large crowd had gathered and there was
no parking in the immediate area. Two off-duty cops left the police
station just down the street and drove up to the corner where
the restaurant is. They double-parked their SUV, with its rear
end blocking the crosswalk. The passenger got out and ran into
the restaurant. For the entire ten to fifteen minutes it took
to get their food, the driver sat in the car (he did put
his hazards on), forcing other cars and pedestrians to detour
around him. You don’t expect New York’s finest to park legally
and walk a friggin’ block, do you?

Civil
society, given a chance, works far better on its own than statists
can conceive. The government sits atop it like a parasite, and
is most often a major threat to its smooth functioning.

The
Cause of the Blackout Swiftly Identified

Somewhat
predictably, The New York Times was immediately able to
pin the blame for the blackout where it belonged: on the free
market. An editorial on
Saturday by Robert Kuttner claimed that "deregulation"
was the cause of the event.

There
are, of course, several problems with his thesis. The first is
that no electricity deregulation has actually occurred. The government,
rather than simply ceasing to interfere in the market for electricity,
instead substituted one set of complex regulations for another.
Whatever the right word for this is ("re-regulation"?),
it’s not deregulation. That’s just a trendy term the proponents
of the new regulations employed to market them.

Kuttner
contends that the "discipline of free markets" can’t
be expected to work for electricity, because it can’t be stored
in large quantities. Kuttner has apparently failed to notice that
sushi, haircuts, concert performances, airline seats, and countless
other goods cannot be stored long or at all, and yet markets for
them work just fine.

He
also holds that the "fairly fixed demand" for electricity
makes the market for it different than other markets. Startlingly,
when Kuttner says this he doesn’t seem to notice that he explained
why the demand is relatively constant in his previous paragraph:
consumer prices are still regulated! Of course, if electricity
prices don’t rise to reflect a shortage, then demand will remain
where it was. What could be more obvious than that this "fairly
fixed demand" is a "fairly predictable result"
of the very sort of regulation for which Kuttner longs?!

Finally,
an unkind critic might ask of Kuttner: what about the blackouts
of 1959, 1961, 1965 and 1977? If Kuttner can tell, one day after
the event, that deregulation caused the 2003 blackout,
can we also conclude that regulation caused the previous
ones?

To
be fair, Kuttner is partially correct in blaming the blackout
on economic theory: "deregulation," as it is practiced
today, is a conceit of economists who think they can use mathematical
models to construct something that, while not a free market, is
so much like one that no one will be able to tell the difference.

But,
like margarine, these schemes always leave a funny aftertaste
that real butter doesn’t have.

The
Non-Cause of the Blackout Swiftly Identified

While
on the subject of the blackout’s cause, I wonder if anyone else
was puzzled by Bush’s statement, only a few hours after the outage
began, that, while no one had any idea what had caused it, he
knew without a doubt that it hadn’t been terrorists. How could
he be so sure, if he didn’t know yet what had happened?
Granted, by that point he was probably fairly certain that no
terrorist had bombed a power plant or flown a plane into one.
But perhaps they thought of something else, of which most people
hadn’t conceived, that would cause a blackout. After all, our
government itself asserted that no one could have foreseen terrorists
using box cutters to hijack planes and turn them into missiles.
But the terrorists thought of it. How does Bush know, without
knowing the cause of the event, that there isn’t some new tactic
that "no one" has foreseen?

I
certainly have no inkling that it was terrorists. Most
likely it was simply a big screw-up. But Bush’s statement demonstrates
the frantic PR concerns of the administration. I think we can
count on it "definitively ruling out" terrorism as the
cause of any disaster that was not unambiguously perpetrated by
terrorists.

August
18,
2003

Gene
Callahan [send him mail],
the author of Economics for Real People,
is an adjunct scholar of the Ludwig
von Mises Institute
and a contributing columnist to LewRockwell.com.

Gene
Callahan/Stu Morgenstern Archives


        
        

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