Think Freely Media presents Common Sense with Paul Jacob

It makes you wonder: Don’t the politicians want California to recover from its energy crisis? A few years ago, California legislators took power grids away from power companies, told them to buy power in an uncontrolled wholesale market, and slapped controls on the prices they could charge consumers. The result: rolling blackouts.

Want to create a shortage? Just cap the price of a commodity below what it would have been on an open market. Demand will jump, supply will slump, profits will disappear, production will decline, and everybody will be unhappy. Markets give people what they need only when markets are free to operate. Okay, so the problems in California have confirmed Economics 101 yet again. So what’s the solution? Impose even more price controls!

Federal regulators are ordering new price caps on California electricity, to take effect whenever the supply falls below seven percent. In other words, when the supply gets very low, we’re gonna make sure we have rolling blackouts. Huh? Sad to say, career politicians and their friends in the bureaucracy often don’t even try to solve problems. They’re afraid to say, “Hey, prices are going to go up. That’s what happens when supply falls and demand increases. You’ll need to let those prices rise if you want to see new production, larger supply, and lower prices over the long run.”

But instead of showing leadership, our leaders would rather blame the power companies and promise the people cheap electricity. At least, whenever the lights are on.

This is Common Sense. I’m Paul Jacob.

By: Redactor

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