Important Economic Trends During Anarchy – Week 10

2020 – Something Big is Afoot. Are You Prepared?

Energy

For this blog you will need three things: (1) your monthly electricity cost, (2) the location of your circuit breaker box, and (3) a flashlight.

The trends in 2020 made me pause about having surgery. It was called “elective” but it was necessary and so I decided the sooner the better. Consistent with 2020, there was drama in the experience including unexpected staffing issues which delayed the surgery from early afternoon to evening and a fire alarm at the hospital. The fire alarm began after I was mostly prepped. Nothing is simple this year. I wondered at my sanity for resisting a quick exit based on the fire alarm relying instead on the hospital’s public address system simultaneously issuing a “Code Blue” rather than ordering “abandon ship”. Did I mention in 2020 nothing is easy?

The medical staff were excellent and helpful in all aspects including calming us about the fire alarm. The alarm itself was quite annoying which is probably both the design and intent of a fire alarm. But having arrived at 10:30 AM expecting surgery to be around 1 PM, the surgeon was embarrassed at 3 PM when he came to explain that the delay was due to a shortage of hospital staff. He did not explain how he had performed his other surgeries that day. I did not ask. Something about his facial expression gave me pause. I decided I preferred my surgeon to be calm.

I think my reply was “No problem, I do not have anywhere else to be right now.” By the time we headed to the OR, the staff I had met all day had left and I was greeted by a room of strangers who assured me that my surgeon was going to be the one who operated. You cannot prove it by me as my last memory was a nurse sharing with me that I was going to feel sleepy. Done.

When I awoke the nurse in the recovery room was a young man. Being an extrovert, I learned that he had switched careers moving from selling paper products to hospitals to being a nurse. That career change was an excellent decision as he was superb at his job. In my semi-conscious state, he helped me navigate getting dressed, to the car, and then secured in it. I owe him big time for his patience and calm help. Apparently, he is MUCH better at nursing than he was at selling paper products. Have I ever told you how much I love capitalism?

My experience also gave me insight that our medical system currently reflects the disastrous combination of the Wuhan Virus disruption of operating norms and too many political leaders who do not believe in the benefits of capitalism. Big government is not a bad joke, it is an absolute disaster. Unfortunately, Virginia is currently in the gripes of the big government party that wants to make all of our decisions for us because they think we are too stupid to make decisions for ourselves. They keep proving that they are wrong, but we suffer the consequences.

I much prefer when capitalism is unfettered and can allocate resources to their best use while competing for the last marginal revenue sale thus producing the maximum goods for the minimum cost resulting in consumers enjoying instant gratification from a plethora of products at the store, hospital, or wherever. Get out of my way! Stop gumming up my life! I can make my own decisions.

California is the best possible illustration of how Democrats do not understand capitalism. Controlled for decades by Democrats who are totally committed to stuff like The Green New Deal, the electricity market in California is a superb illustration of their past really dumb decisions and the third world future here in Virginia if we continue along the same path.

So that you can begin to understand their situation please multiply your current monthly electricity cost by 1.61 and that is what you would pay in California. Their electricity cost 61% more than any other state in the USA.

Uniquely, this year’s electricity crisis in California is due to an actual lack of electricity. Previous California electrical crises were blamed on wildfires, ad nauseum even when those fires were the result of the electric company not having enough financial resources to maintain their grid thus causing the fires because of Democratic policies. Folks this is not only inept government leadership, it is deadly dangerous.

From my reading, here is a summary of facts about the electricity market in California:

1. About one third of California’s electricity is generated by solar and wind with massive government subsidies.
2. Neither renewable source is 100% dependable so utilities need a reliable source as a backup. Most states have electrical generation facilities that are reliable but duplicate.
3. Yes, there are things called batteries, but they have limitations.
4. About a third of the electricity consumed in Californian is generated outside of the state, some on fixed contracts but most is purchased off the western electricity grid.
5. Due to the current summer weather, the adjacent states are using their electricity generated in their state for their own state, so none is available to sell to California.
6. Hence the rolling blackouts in California.
7. Yet California wants to be 100% renewable energy by 2045 so in the middle of an electricity shortage they are shutting down dependable natural gas electricity generators.
8. Lunacy or leadership? In California, the voters think those are the same thing.

It is amazing to me that after decades of such inept “leadership” the Democrats continue to get elected to office in California. Also amazing is that any other state such as Virginia would see the problems of making dumb decisions but follow the same path. Is it a case of dumb and dumber?

Now for the current California experience, turn on your flashlight and go to your electrical circuit breaker box where you will turn off the main circuit to you home, so you have no electricity. None. Sit in the dark none. Wait 24 hours and you can turn the electricity back on and then celebrate that it costs you 61% more for your electricity than you are currently paying. Such a deal? NOT! It is those little things the Democrats never you tell about their ideas, like the real cost, that hurt. A lot.

Government intervention ALWAYS distorts markets and creates unnecessary crises. Californians may enjoy living without electricity. I am not interested. The Green New Deal being driven by the Democrats is simply. Stupidity. Cubed.

Energy Costs are a critical part of locating and operating a business especially one that is a major user of energy such as manufacturing. As the rate of RE-Shoring manufacturing back to the USA or non-Chinese locations accelerates, energy cost will be a major determinant of the growth of the tax base of our various states. On an individual level, the cost of energy will likewise determine where folks decide to live. The indirect impact, no workers available means the manufacturing or other business will locate elsewhere.

In California no growth has been a goal for decades. They are about to enjoy success to a level they never envisioned as the out migration has begun to accelerate. There are much worse challenges for a state to face than population growth.

I look forward to sharing with you what I read and learned last week, how it will impact the land market and the general economy. In the meantime, be careful who you follow.

“Let no one deceive you with empty words, for because of these things the wrath of God comes on those who are disobedient.”

(Ephesians 5:6 New Revised Standard Version, Oxford University Press)

Capitalism builds wealth, socialism consumes it in self destruction. I serve an awesome God. With God on our side, who can stand against us.

Stay healthy,
Ned

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