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Capitalism vs. Socialism?

There is an important side story about what just happened in Texas with their (not completely unpredictable) freezing weather, and the collapse of their electrical grid. The story we are being told is that Texas deregulated their energy system in 1999, using the promise that this would increase competition, provide consumer choice, and thus lower prices for electricity and other sources of energy. However, in this competitive “free” market, certain (shall we say) shortcuts were taken. In particular these companies didn’t bother to winterize their pipelines and other equipment, as is required in all other states through — you guessed it — pesky and “socialistic” regulations.

But ironically, some Wall Street Journal reporters looked into the Texas energy market, and found that (surprise, surprise) Texans with deregulated energy rates paid $28 billion more than those with traditional, regulated plans. They could do this because not all areas of Texas became deregulated, and what they found was that people who bought “free market” energy paid 13% more than the national average for their energy, compared to people who were still getting their energy from regulated suppliers, who paid 8% less than the national average. And the increased competition and choice that was promised through deregulation? Mergers left Texans with a duopoly of essentially two main retail electricity providers.

Bottom line? Deregulation was a total bust in this case. The resulting deregulated market cost consumers more, provided worse service, did not anticipate obvious problems, and when those problems occurred the lowered supply of energy and the increased demand naturally resulted in insanely high energy bills, as high as $17,000 for a single month’s electricity for a single house. That is, if their electricity wasn’t actually cut off, leaving them freezing cold (in some cases, to death).

Now, I am a capitalist. I believe in (actual) free markets. But what they had in Texas was not a free market in any sense. If people are freezing to death, they will pay any price necessary to stay alive. It isn’t freedom if there is a gun to your head. That’s why we have laws against monopolies, which the Republicans seem to ignore, while pretending to sing the praises of free markets.

Also, note that when the Texas energy market failed, the federal government had to declare an emergency and bail out the energy companies. If this were a truly free market, the energy companies are the ones that would suffer, not the consumers.

In the system championed by the Republicans, the corporations are the ones who are protected, and the consumers suffer. There is a name for this kind of system, where corporations are partners with the government, and individual rights (like for consumers) are suppressed. It is called national socialism (also known as Nazism). The Republicans paint the Democrats as socialists, and manage to scare people into voting against their own interests. How many times will we be fooled by this?

© Ruben Bolling
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5 Comments

  1. Ray wrote:

    No sane “conservative” Republican believes what they tell their constituents.
    They’ve been running on the “Two Santa Clauses” platform for over 50 years, to screw over the American voter.
    But now the GQP seems to actually believe the tripe they trot out for the voters.

    Sunday, February 28, 2021 at 8:55 am | Permalink
  2. J wrote:

    I disagree with your interpretation of this situation win Texas not representing a Free Market system. Don’t worry, we can both be right. The concept of a “Free Market System” is just that, a concept, which is why the right continue to have success with it – it’s everything to everyone who wants to believe in it.

    The biggest ommission proponents of most Free Market concepts have is assuming that it’s inherently benevolent, ignoring corruption and venality. Of course they’re breathless about the opposite being the case for Socialism. It’s all fairy take nonsense really.

    There is a practical solution, known by a variety of names, whether it’s Balanced Economy, Mixed Economy, Improved Capitalism, Social Democracy … it’s the only orgnizational variant that actually works the majority of the time for the majority of stakeholders.

    As soon as you hear anyone proclaiming the virtues of unrestrained Capitalism, Socialism, Corporatism, Communism etc. under any of their guises, RUN LIKE HELL.

    Sunday, February 28, 2021 at 10:57 am | Permalink
  3. Iron Knee wrote:

    I’ve talked about this several times before, but I’ll repeat it. I am a pragmatist. There are some things that are better handled by capitalism. And there are other things that are better handled by something like socialism. And the vast majority of things require a reasonable amount of laws and regulations in order to work. Heck, even capitalism wouldn’t work if we didn’t have rules for it (antitrust laws, safety laws for food and drugs, and so much more).

    The problem is that we have become so polarized that we act like ideologues. Many things, like schools, firefighters, roads, streetlights, parks, police, and even the military are socialist, and most people would not like them if they were privatized and run as capitalist enterprises. I believe the same thing should be true of health insurance.

    The right continue to have success at using “socialist” as a boogeyman, mainly because most people have no idea what it is and that many of our most popular things are socialist. On the other hand, there are many things that should be capitalist, like computers. With proper regulations of course.

    And I totally agree, any unrestrained *ism is a good reason to run like hell.

    Sunday, February 28, 2021 at 2:27 pm | Permalink
  4. Anonymous wrote:

    Adam Smith’s book spoke about a regulated market. A point often omitted.

    Sunday, February 28, 2021 at 4:52 pm | Permalink
  5. Greg wrote:

    The right likes to equate unbridled capitalism with freedom, the unspoken implication that you can never have enough (see Ted Cruz’s speech at CPAC). There’s another name for unbridled freedom without responsibility. It’s called childhood. And, ironically, as seen through the lens of politics the right can often be confused with a playground full of kids behaving badly.

    Sadly, Texans are paying the price for their leader’s short-sighted irresponsibility. Some kids have to learn the hard way. Unless, of course, your lucky enough to have parents that can take you to Cancun. And (literally) screw the pooch.

    Wednesday, March 3, 2021 at 7:27 am | Permalink

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