Blackout Shows CA Is Third World

FEB. 15, 2012


More evidence California has descended into Third World status: Yesterday evening I sat in the dark in my apartment for two and a half hours as a blackout blanketed Huntington Beach.

The Orange County Register reported: “HUNTINGTON BEACH — A widespread power outage in Huntington Beach left more than 21,000 customers without electricity on Tuesday night, authorities said.

“A technical problem with a breaker at a substation knocked out power to 21,285 customers at about 8 p.m., Southern California Edison spokesman David Song said….

“Officials have not determined what caused the breaker of the substation, which they described as the ‘nerve center’ of the local power grid, to fail.”

I’ll tell you the cause: California’s slide into incompetence, poverty and Third World governance.

I remember that, growing up in a Detroit suburb in the 1960s, blackouts struck only when a major thunderstorm, sometimes whipping up tornadoes, crashed through the area. The blackouts hit maybe once every five years, and with good cause. While sitting in the darkness clutching a flashlight and comforting my dog and cat — who were freaked out — I used my cell phone to call my brother, and he affirmed my memory.

In those halcyon days, Detroit Edison, the local power company, even distributed free light bulbs before the government made them stop on anti-trust and environmental concerns. Imagine that: a company actually encouraging customers to use its product. And if you lived through one of those harsh Michigan winters in the 1960s and 1970s, bogus global “warming” wasn’t a threat, but something to be hoped for.

But in Southern California in recent years I’ve been hit with one of these blackouts about once every year. And as with yesterday, there’s no good reason for them. The weather was typical Southern California balmy in February, the reason I moved here instead of to Alaska. Haven’t there been advances in power-grid technology in the past 50 years? Apparently not, at least not in Third World areas.

And I well remember the blackouts of 2000-01, during the California electricity crisis. The incompetent, Third World utilities and state government couldn’t keep the lights on for millions of people at a time.

Utilities = Regulators

Part of the reason is that the regulators and the utility executives are the same people, an obvious instance of Third World-style crony capitalism. The head of the California Public Utilities Commission the past nine years has been Michael R. Peevey. According to his bio, he originally was appointed by Democratic Gov. Gray Davis in 2002. After Davis was recalled, one might have expected that a changing of the guard was in order. But Peevey was re-appointed by Republican Gov. Arnold Schwarzenegger, showing the virtual identity of the two parties.

According to his bio, “Mr. Peevey was President of Edison International and Southern California Edison Company, and a senior executive there beginning in 1984.  Mr. Peevey has served on the boards of numerous corporations and non-profit organizations.” So he’s regulating where he formerly was regulated. And both political parties are just peachy with that. How cozy. How crony capitalist cozy.

Naturally he’s also politically correct on the right issues: “He is also a strong supporter of renewable energy and renewable procurement requirements for utilities, and is a leader in implementing California’s Solar and Greenhouse Gas Initiatives. He also serves as Chairman of the California Emerging Technology Fund.”

Even after Solyndra went bankrupt last year, blowing $535 million in loans from the federal taxpayers and a $25 million tax break from California, the PUC under Peevey continued to support such breaks for similar companies. Reported Bloomberg, “Paul Clanon, a deputy to Public Utilities Commission President Michael R. Peevey, said California would risk losing advanced-energy companies to other states if the incentives were taken away.

“’This is exactly the wrong time to be pausing a green-jobs program’,” Clanon said.

“In November 2010, the authority granted Solyndra a tax break on equipment for its manufacturing facility for cylindrical solar modules in Fremont, California. The break was valued at $34.7 million, according to a report from [California Treasurer Bill] Lockyer’s office, of which the now-defunct company has used $25.1 million.

“Solyndra’s exemption accounts for nearly 80 percent of the tax relief used so far, according to figures from Lockyer’s office. The program, initiated in 2010, has awarded a total of $104 million in tax breaks, most of which haven’t been used.”

But when you’re “pursuing a green-jobs program” instead of the real job of keeping the lights on, you end up with endemic blackouts, such as those that keep striking California.

This is typical of third-world areas: More concern by public officials for subsidies for crony capitalist companies, such as Solyndra, than for providing efficient services to customers.

‘Culture of Corruption’

My colleague Katy Grimes has written a popular series of articles of how the PUC under Peevey has erected dangerous power lines through Chino Hills to bring power from trendy “renewable” energy sources, such as windmills, to Southern California. She wrote: “In the Southern California city of Chino Hills, there is a palpable anger spreading as the landscape is changing from bedroom community to industrial park. The bedroom community landscape now includes 200-foot electrical towers near homes, churches and parks.

“The Tehachapi Renewable Transmission Project has had many of the 76,000 Chino Hills residents up in arms, but they are now left feeling impotent against one of the largest power providers in the state. Residents are watching helplessly as the installation of new massive electricity towers —  200 feet tall and 60 feet wide — are erected quickly, as close as 40 feet from some residents’ backyards.

“Southern California Edison’s Tehachapi Renewable Transmission Project will cost a total of $1.8 billion in order to access and construct renewable energy generators from Kern County to western San Bernardino County. The City of Chino Hills has proposed various alternate routes that would move the transmission lines away from residential communities and schools into a local state park area, but were rebuffed by the California Public Utility Commission.”

In another article, “CPUC Stuck In Culture of Corruption,” she wrote, “It was on Peevey’s watch that a succession of deadly events took place, including the horrific 2010 San Bruno gas pipeline explosion, which killed eight, injured more than 100 and destroyed 38 homes (pictured at right). Peevey was CPUC President when a gas line exploded in Rancho Cordova on Christmas Eve 2008, destroying a home and killing the occupant, as well as the very recent September pipeline explosion at a Cupertino condominium, which did not receive much press coverage.

“After years of approving rate increases earmarked for the San Bruno pipeline upgrades, the CPUC never followed up to make sure that PG&E actually did the work. Instead, PG&E pocketed the rate increases, shined on the pipeline upgrades and kept going back to the CPUC trough for additional rate increase approvals.”

Other Third World Indicators

There are other Third World indicators for California:

* Corrupt elections. As my colleague Steven Greenhut just wrote, Attorney General Kamala Harris, who’s charged with upholding the law in California, destroyed a pension-reform initiative by giving it a “false and unfair title…. Harris runs the Justice Department, yet she chose to wield her power to help her political allies and harm her opponents by posting a blatantly dishonest title. This is a totalitarian approach. If there is no semblance of fairness in the Justice Department, then all we are left with is the exercise of raw political power. Fear a society in which people like Harris rule the roost. Actually, we’re already in that society.”

* Crony redistricting. As John Hrabe has detailed on our site, the California Citizens Redistricting Commission rigged the process of drawing new lines for legislative and congressional districts. It should be renamed the California Crony Redistricting Commission.

* One-party politics. In addition to the corrupt elections and the crony redistricting listed above, Republicans bear much of the blame for their own descent into irrelevance. But however it happened, California now is a typical one-party Third World state. The Democratic Party dominates everything, beginning with all 10 statewide offices (including the supposedly “nonpartisan” Superintendent of Public Indoctrination). There’s no competition and no choice for voters.

* One-party union power. A major facet of one-party Democratic domination of California is the control over the party wielded by the government-employee unions. The taxpayers funnel billions to the union employees. The union bosses siphon off hundreds of millions in dues for political campaigns. The campaigns elect favored Democrats to office. The Democrats then do the unions’ bidding. Hence, there never is any substantial reform of pensions, or poorly performing schools or massive pay and perks for union members.

* High taxes. Crony Third World countries soak the productive to subsidize the crony unproductive. This was described by the great Peruvian economist Hernando De Soto in his book, “The Other Path: The Economic Answer to Terrorism.” The title is a reference to the Shining Path (Sendero Luminoso) socialist insurgent group in Peru, which attacks capitalism in favor of aiding the poor with wealth distribution. But De Soto points out that the real cause of Peru’s poverty is a crony capitalist system that prevents wealth creation by high taxation and massive bureaucracy. He detailed how hard it was  to go through all the red tape just to start a small business.

High taxes in Peru forced the wealthy to move their money to other countries, instead of investing it at home to create businesses and jobs.

The solution, De Soto said, isn’t socialism, but cutting taxes and getting rid of red tape. Such reforms create businesses and jobs, which in turn lift the poor into the middle class.

The whole situation in Peru sounds just like California with its anti-business, jobs-killing policies and attitude. It’s a message that should be heard by the Occupy Oakland and other Occupy movements.

* Bankruptcy. Looting the productive seems a good idea for a short time, until the looted leave for more favorable investment and business climates. Too much spending, too much taxing that drives away producers and a general anti-business attitude are major reasons why California effectively is bankrupt.

* Shrinking Middle Class. The pattern in First World areas — such as California once was — is to have a small ruling elite; a large middle class that can be entered by anyone just by working hard; and a small lower class that can be escaped by diligence, determination and savings that move one into the middle class, or even higher. All societies have ruling elites; can’t avoid that. But in First World countries, the ruling elites at least take some interest in the other classes, and in particular are solicitous of encouraging and preserving the middle class as the bedrock of prosperity and social progress.

By contrast, Third World countries also have a small ruling elite; but they have a small middle class that may be shrinking; and the have a large lower class that’s hard to escape. This now is California’s condition. In December, the Public Policy Institute of California reported that, since 1980, California’s middle class has shriveled from 60.5 percent to 49.7 percent of the population.

The Contra Costa Times reported that, according to report co-author Sarah Bohn, “Globalization and technological progress contributed to the long-term changes, which hurt some but were not always bad for everyone over the decades, she said. While some fell out of the middle into poverty, others moved from the middle to the higher income brackets.”

A better explanation is that high taxes and increasing government regulations slammed the middle class, while leaving California still attractive to the wealthy, such as those in Silicon Valley. If you’re a 180-IQ computer nerd, California still is the place to be. But if you’re just a middle-class person, it isn’t.’

In particular, I would add, the state’s regulations severely restricting housing construction have made home ownership prohibitive to the lower end of the middle-class, especially in coastal areas. Especially devastating has been the California Coastal Commission, a Soviet-style agency imposed 40 years ago that severely restricts home construction along the coast, thus keeping prices artificially sky-high, even after the recent real-estate bust.

This has a ripple effect, forcing up housing prices in areas next to the coast, and so on inland.

For example, the median price of a modest home in Huntington Beach was $20,000 in 1970, about the national average. That would be about $200,000 in today’s inflated dollars, well within the reach of most middle-class families. And as recently as 1998, the median home price there was about $160,000. But the actual median price now is $550,00, according to Zillow. See the line with the light-blue dashes in this graph:

California Nightmare

The result of all the heavy-handed government government taxation and bureaucracy is the destruction of the California dream. That dream is to move to California, buy a modest house, work hard at a decent private-sector job, raise some kids and have fun frolicking in the surf and sun. That dream still is enjoyed by a wealthy few: the 180-IQ Silicon Valley geniuses, the government workers with their generous pay and pensions, some private-sector business leaders who haven’t yet moved to Texas, and drug dealers.

For everyone else, its a California Nightmare of low wages dropping fast, unaffordable housing, a shrinking middle class, government schools that churn out illiterates and innumerates and blackouts that leave people fuming in the darkness.




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