Texas Shows Reality of Deregulation

There’s an old phrase people produce when they’re dubious about a particular brainstorm, especially one floating around the corridors of power: “Yeah, and I’ve got a bridge I wanna sell you.” Well, after last week’s humongous blizzard, maybe we can add another skeptical phrase: “Tell it to Texas.”

That’s because the harms, long term and short term, of the 44-year capitalist and corporate “deregulation” drive hit home with a vengeance in the Lone Star State.

As by now the nation knows, a monster winter storm descended on Texas. The electricity grid in the nation’s second-most-populous state collapsed. Pipes froze and broke. Heating vanished. Machinery and transportation came to a dead stop. You can’t gas up your car if the gas pump has no power to push fuel through the hose.

Dozens of people died. And when the power came back on, people were hit with four-figure and five-figure utility bills, for a month when there wasn’t much juice.

Why did all this happen? In a word, deregulation, although in Texas’s case, the more-precise phrase might be “no regulation.”

Texas has always been a corporate-dominated state, stretching back a century ago when oil barons started exploiting its fields. One key facet of that capitalist control is its electric grid.

While the United States has hundreds of local power companies, it has only three big grids. Two connect firms’ lines to each other so that if a blackout hits one part, the utilities can import outside power.

The biggest grid stretches from Maine and Miami west to the Rockies. The No. 2 grid is the entire West Coast up to the Rockies. The third grid is Texas, all by itself. Deregulation is why.

When the nation was powering up in the 1920s and 1930s, Texas utilities made a conscious decision to “deregulate.” They didn’t want to be subject to national rules that would come with an interconnected grid, overseen by the New Deal-era Federal Power Commission.

So the way to avoid national rules was to avoid connecting to the rest of the nation. With only a few minor exceptions, Texas power lines stop at its borders. 

Is there a regulator? Theoretically, yes: The state power commission. Texas utilities also later established a partnership to shift power back and forth in case of emergencies. But, given Texas’s pro-corporate culture, there is no effective regulation of electricity there.

The companies captured the commission, which lets them do whatever they want, including suddenly “adjusting” customers’ bills to “meet supply and demand.” It also let the firms maintain the grid, or, as Texans found out from the blizzard, not. That’s deregulation, writ large.

And when the storm hit, the Texas grid collapsed and millions of people lost power. Texas couldn’t import power from out of state. Deregulation, you see, in the name of profits.

Was all this woe in Texas foreseeable? Yes.

When the deregulation drive started, with airlines in 1978, unions raised red flags about its impact on workers. That didn’t stop corporate America and its political lackeys.

Just as one example, Nick Weiner, then director of the Teamsters’ Justice for Port Drivers campaign, told the Netroots Nation conference in Atlanta four years ago that misclassification of the nation’s 100,000 port truckers as “independent contractors” unprotected by labor law was a direct result of the 1980 deregulation of that industry.

“It continues to spread across industries, upending the U.S. economy and creating huge income disparity among workers,” Weiner added.

Airline industry abuses quickly surfaced after, in a monumental Democratic Party mistake, carriers were deregulated in 1978. Lawmakers have spent the decades ever since trying to repair the damage to consumers—without tackling the basic problem.

“At best, the promised benefits of deregulation have not been fully realized,” then-House Energy and Commerce Committee Chairman John Dingell (D-Mich.) said in 1999 while introducing one of many “fixes.” “The traveling public is still captive to monopolized routes and airports.…While I fully support competition, two decades of experience reveal consolidation, diminished choice, and higher prices in many markets.” Sounds like Texas, doesn’t it?              

Here’s another area where deregulation is, arguably, a disaster: Broadcasting, in the 1987 elimination of the Fairness Doctrine. To quote Wikipedia: “The [FCC] fairness doctrine had two basic elements: It required broadcasters to devote some of their airtime to discussing controversial matters of public interest, and to air contrasting views regarding those matters.

“Stations were given wide latitude as to how to provide contrasting views….The doctrine did not require equal time for opposing views but required contrasting viewpoints be presented. The demise of this FCC rule has been considered by some to be a contributing factor for the rising level of party polarization in the United States.” That, in a word, is putting it mildly.

Were workers and unions happy? We don’t know. But we’d guess that deregulation hurt everyone not (a) a corporate crook out for huge profits or (b) a radical right-winger filling the airwaves with lies, prejudice and propaganda. Think Rush Limbaugh. Or Fox. Or Donald Trump.              

Even Adam Smith, the founder of market economics, recognized regulation’s benefits.              

So is deregulation good for you? For me? For workers in general? These examples—there are many others—say the answer is “no.”

Now, tell it to Texas, and the rest of us.