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Jewish World Review March 15, 2001 / 20 Adar, 5761

Thomas Sowell

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Consumer Reports

California dreaming -- THERE is a computer mouse that glows in the dark and the state of Michigan is sending more than 4,000 of them to businesses in California. This is to remind these businesses of the electrical blackouts that have plagued California -- and of the fact that Michigan has lots of electrical power available. Nor is Michigan the only state trying to lure businesses away from California by reminding them of the economic problems created by the electricity crisis in the golden state. Florida is sending flashlights, for example.

What all this means is that the consequences of the electricity crisis in California are likely to be felt for years to come, just as the causes of this crisis go back for decades into the past. With or without blandishments from other states, California businesses are likely to start drifting away to places where they are less likely to suffer economic losses from lights suddenly going out and their production lines suddenly stopping.

California's citrus crops are especially vulnerable to an electrical stoppage on cold nights, when freezing temperatures can destroy a whole year's work, unless man-made warmth can be generated, usually by electricity. In other industries, perishable products can be spoiled if a long electrical outage means that these products are no longer kept refrigerated.

The electricity crisis is only the most dramatic example of the high costs of California's indulgence in unrealistic policies. Because of bureaucratic over-regulation in the golden state, the head of California-based Cypress Semiconductor says that his company can get approval to start new operations in a town in Texas faster than they can get approval to put up a new flagpole in their home office in San Jose.

The west coast is not called "the left coast" for nothing. Piling regulations and arbitrary requirements on businesses fits the vision of those who regard private enterprise with suspicion and environmentalist and other left-wing movements with indulgence. Blocking the building of electrical generating plants has been a popular activity for years and one indulged by courts of law, where trespass and other laws have been lightly enforced against those who disrupt anyone building anything they don't like. Token arrests and suspended sentences create bargain-basement martyrs.

Now, after years of such actions, California consumers are belatedly discovering that the real costs of such activities include rolling blackouts. As time goes on, they may discover that the costs also include the migration of jobs to other states, as well as the migration of businesses that had been paying millions of dollars in taxes into the local communities.

The same mindset has dominated the California housing market. The very words "builder" or "landlord" are anathema to large segments of California's literati and glitterati. Yet they fervently proclaim their desire for "affordable housing" for the poor, while making it virtually impossible by piling on red tape, delays and arbitrary costs to those who try to build anything.

Many lament the overcrowded highways that make many California commutes a nightmare, while supporting laws that prohibit high-rise apartment buildings that would permit more people to live in a given area near their jobs. They lament high rents while taking vast amounts of land -- three-quarters of the land in San Mateo County, for example -- off the market for "open space." Anyone who has taken Economics 1 knows that, when you take most of the land off the market, supply and demand is going to raise the price of the remaining land and of everything built on that land.

Even when the closing of military bases in San Francisco gives the city huge tracts of land with magnificent views -- the Presidio, overlooking the Golden Gate, and Treasure Island, with a stunning view of the skyline -- this does nothing to ease the housing shortage because no one would stand for anything so crass as its sale in the private marketplace, to permit housing to be built.

At the heart of these and many other self-indulgences is the fact that decisions are made by people who do not pay the costs of those decisions. Above all, they pay no costs for being wrong. Ironically, the political left often blames private businesses for emphasizing short-run profits at the expense of longer-run considerations. Yet such decision-making is the norm in politics, where the main thing that matters is the next election. We can only hope that California voters will remember at the next election that there is a long run, when chickens come home to roost.

JWR contributor Thomas Sowell, a fellow at the Hoover Institution, is author of several books, including his latest, Basic Economics: A Citizen's Guide to the Economy.


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© 2001, Creators Syndicate