If there is anything that true conservatives and die hard libertarians can agree on, it is that deregulation is a good thing. By deregulation I mean the loosening of government constraints and operating rules on the manner in which individuals and companies conduct their business. Deregulation they say leads to greater creativity as the profit motive kicks in. Don’t worry about personal damage. The market will attend to that. If someone is making a harmful drug that the FDA would not have approved for safety or efficacy reasons when thoroughly tested, the market will reject it and the manufacturer will go out of business. Unfortunately, there will be thousands of malformed Thalidomide babies first. You get my point. I strenuously argued with my libertarian friends at the Cato Institute that their push for deregulation and dependence for safety on market forces was misplaced and that government has a role in protecting the citizens from bad actors.
The one thing I learned as a research regulator was that there are a lot of bad actors out there and the people need protection from them in the form of regulation. This week in Texas, the chickens came home to roost.
Most of Texas had chosen to receive its power from an independent grid operator (ERCOT) and ERCOT operated that grid on the profit motive. Cheap energy was to be had by operating in the least expensive way possible including not having sufficient back-up for a weather emergency. This week the emergency struck and the unregulated system almost collapsed. The ERCOT leadership is painting itself as heroes for initiating rolling blackouts that prevented the grid from collapsing. Hey, how about preparing for an emergency with extra fossil fuel from the state that earns revenue from that fuel.
As my conservative friends might say, this is a natural outgrowth of deregulation. They are correct. When the adults are not watching, the kids will play with matches and start a fire. The adults have to always be watching. This week, the adults in Austin were asleep at the wheel. We cannot let Governor Abbott and his cronies in the legislature try to tell us that they did not have a role in this disaster. They have been in charge for years (since at least 1998). They created this market and this independent energy grid. They have to own the consequences of severe deregulation.
Many are the arguments I have had with the free marketeers who don’t believe that regulation of potentially dangerous yet essential human activities need governmental oversight. I think they are wrong. The collapse of the financial markets in 2008; the horrible response to the coronavirus; and now this energy fiasco in Texas suggest there is still a role for government in the oversight of business—especially essential businesses upon which people’s lives depend.
There should be immediate hearings on Capitol Hill on how the people of Texas fell victim to ERCOT and the Public Utility Commission that oversees ERCOT. We need to know why the Governor did not foresee this and why the leaders of ERCOT were seemingly operating independently of any meaningful oversight.
As a former regulator who oversaw a huge clinical and basic research administration apparatus in a large cancer center, I can assure you that I did not believe in deregulation of anything. I once had a junior high school teacher who, when she was passing out our exams to us at finals time used to say, “No cheating. It’s not so much that I think you’ll cheat. I know damned well you will.” I never forgot that and believe it to this day.
A competent regulatory structure with rules for how everyone does business that protects the rights and well being of people of a jurisdiction is required. Deregulation undoes the protection. Does it raise costs? You bet it does. Does it save lives? Ask the people of Texas who did not have regulatory protection against predatory energy providers. To me this is a no brainer. But I’m a parent. Children need watching and many adults are children when their pocketbooks get involved. Austin seems to be a children’s paradise. Send in the adults.