Is California Moving Toward Government-Owned Electricity?

In 1929, almost a century ago, the great economist Ludwig von Mises published “A Critique of Interventionism.” It’s written in plain language and is free online. He described how government intervention in the free market is not socialism, but eventually “leads to socialism because government intervention is not only superfluous and useless, but also harmful. … It lowers labor productivity and redirects production along lines of political command, rather than consumer satisfaction.”

He died in 1973 at the good old age of 92 and was the teacher of Friedrich von Hayek, who won the Nobel economics prize in 1974.

I bring up Mises because he could have been writing about California’s electricity market, which has been dysfunctional for three decades and well could end up entirely run by the California government. That’s actually what was called for in a June 2 editorial in the Los Angeles Times titled, “Californians don’t have to accept skyrocketing electric bills. Here’s how to fight back.”

The way to fight back? “Customers of publicly owned utilities such as the Los Angeles Department of Water and Power pay lower electric rates in large part because a profit margin isn’t part of the equation. Gov. Gavin Newsom threatened to take over the troubled PG&E during its last bankruptcy if it didn’t become a more responsible utility. Ultimately, the governor struck an oversight deal. But a public takeover is still worth exploring to protect Californians from unaffordable rates.”

The internal link for “is still worth exploring” clicks to a 2019 L.A. Times editorial, “We’ve reached a point where public ownership of PG&E shouldn’t just be on the table, it should be actively explored by state and local officials. Newsom has hinted he would open to public takeover of the utility and has raged about its ‘corporate greed,’ but he has also said he wants to see as many bidders for ownership as possible, including from other profit-making entities. Although it’s good for him to consider all approaches and all bidders, public ownership shouldn’t get short shrift in the process.”