Power Struggle.

Left-Leaning Climate Provides the Backdrop to State's Electricity Crisis

ARE you glad to live in a somewhat socialist economy?

If you are a consumer, or run a business, in Los Angeles, Burbank and other Southern California cities with municipally owned power, you may well want to paint yourself a little red.

Over a decade after the collapse of the Soviet Empire and the supposed global triumph of market capitalism, singing the praises of public power may seem a little odd, but that's the way things are moving here in California.

Yet the bungled deregulation of electricity in the Golden State -- and the way it has been reported -- makes having the city run your power supplies seem like a good thing. Just think about all those suckers in the Bay Area or in the Edison zone who may find themselves stuck with astronomic power bills, or even worse, unreliable electricity.

Of course, the recent lionization of DWP commissar S. David Freeman and his New Deal era ideology -- and the attack on free markets in general -- ignore some vital points. One critical aspect is that the deregulation itself was half-baked and left power supplies in the hands of oligopolistic, shortrun-oriented firms such as Southern California Edison and Pacific Gas & Electric. Also, by its nature, electrical power generation is not susceptible to entrepreneurial competition; it's not like developing Web pages, a fast-food concept or a new line of high-end furniture.

Secondly, the roots of the crisis lie largely in the growing power of environmental zealots. The ecology crowd has gotten much stronger with the 1990s boom since growth tends to make consumers and businesses forget about competitive pressures. Everyone's a tree hugger in good times.

As a result, we have allowed environmental concerns to block virtually all new power generation in California for the last generation, with ever more stringent controls. As a result no new plants have been constructed in 15 years, even as usage and population increased drastically.

Then came the crunch. Even with improved air quality, the logic of legalistic environmental laws made the state shut down 25 percent of its generation capacity a few weeks ago. When surrounding states -- which provide roughly 20 percent of the state's power -- refused to sell California what it needed, the fix was in. We had nowhere to turn and the crisis ensued.

Unfortunately, press coverage of the crisis has largely ignored the environmentalists' role. Why? Likely, because the enviros enjoy almost lock-step support in the media. After all, who can be against clean air and water? If there's a problem, it must be the dirty capitalists who did it.

This thinking, particularly in Los Angeles, goes well beyond the power crisis. L.A.'s media and academic establishments are basically anti-capitalist in their mind set. Anything that is bad that is created by the marketplace -- such as the disparity in wages or spiking costs of virtually anything -- can only be solved by government fiat.

Dim prospects

On the other hand, the positives of the market, like rising standards of living or thousands of new businesses, supposedly are creations of nature, not the positive impacts of market economics.

In this environment, the future for pushing free market economics is not very bright. The ascension to power of a Republican administration can only embolden public sector advocates, since they will no longer be in the unfortunate position of defending a Democratic-led capitalist boom. Now the "enemy" is fully in charge, and the gloves can go off prospective class warriors.

Other factors may also help push the anti-business agenda. As social democratic analyst Harold Meyerson has pointed Out, an increasingly effective labor movement, more and more socialistically inclined, is growing in power, almost enough to make the miserable candidacy of Al Gore succeed. Support for the Republican Party's candidate, the equally uninspiring George W. Bush, was reduced to a largely middle-class, white base.

In Los Angeles, and many other cities, this base is shrinking. Minority voters, even those with good incomes, are still voting left, even if living "right." Demography and the politics of race, gender and sexual orientation turn even prosperous beneficiaries of capitalism into defenders of quasi-socialism. How else to explain the inevitable entrance of left-wing vagabond Tom Hayden as representative of the chic Westside and a race in Hollywood that pits public union stooge Scott Wildman against, of all people, Art Goldberg, the even woollier brother of our homegrown Rosa Luxemburg, Jackie Goldberg? In such a context, even Hollywood retread Mike Woo could be seen as a business savior.

Is there any fly in the ointment to this scenario of leftward lurch? Yes, and the power crisis may show it. The Democratic left has two critical constituencies -- socially liberal urban and suburban whites and working-class Latinos. Together they make the party, and its left wing, pretty dominant.

Yet if the case is made that the only way out of the power crisis is more power -- that sounds logical doesn't it? -- something has to give, basically the maximalist environmental position that opposes anything that might lead to growth. The wealthy enviros may oppose building new capacity, or freeing what already exists, but what about Latino working-class voters? After all, they will be the ones who will lose most of the jobs at the construction sites and inside the factories.

Fixing the problem

Balancing these two interests -- more than anything -- will prove the critical challenge for Gov. Gray Davis as he tries to settle the power crisis. Ultimately the Democratic Party must either be for growth and a future for its largely Latino working class, or not. This constituency won't care if power is public or private, only that it is turned on.

This conflict -- growth versus anti-growth -- is the teal issue behind the energy crisis. As for deregulation, perhaps it would be better if California simply took over its own power generation, as with the DWP, so that the issue of corporate "greed" might be eliminated. Or we could open things to real competition, and let capitalism work its magic, Clearly, the current system must go.

For most consumers it really won't matter who owns or controls the electrical system, as long as the economy's interests are served in a reasonable and expeditious way. Frankly, I don't see much that's entrepreneurial about the private power companies as presently constituted. This may be a case where a little local socialism might well prove good for business unless a truly free market alternative can be devised.

Joel Kotkin is a senior fellow at the Davenport Institute for Public Policy at Pepperdine University and research fellow at the Reason Public Policy Institute. He can be reached at [e-mail].