Merle Rubin
Los Angeles Times 25 August 2003, Part 5, page 18.
Power Play: The Fight for Control of the World's Electricity, Sharon Beder, New Press, $25.95 (416p)
If you've ever suspected that most, if not all, of the deregulation that has
been going on in the last few decades is a con job, Sharon Beder's eye-opening
"Power Play" will more than confirm your suspicions. If you have put
your faith in mantras like "deregulation," "privatization"
and "the marketplace," Beder's account of the campaign to control
the world's electricity may open your eyes or, at the very least, make you think
twice about the gap between rosy promises and blackout-filled realities.
The story Beder tells couldn't be timelier, particularly for Californians. A
chapter is devoted exclusively to deregulation in California and is followed
by two chapters on the rise and fall of Enron. Not only does she provide a clear
explanation of what she believes led to the state's infamous power crisis of
January 2001, but she also describes a group called "the American Taxpayers
Alliance, headed by a Republican campaign manager and with secret funding sources,
said to be energy interests ... [that] spent some $2 million on television commercials
blaming [Gov. Gray] Davis for the crisis."
Who was to blame? In Beder's considered opinion, the deregulation of the energy
market, not only in California but all over the world, has led to the very conditions
that regulations were designed to prevent: private power companies manipulating
the supply of energy, causing artificial shortages, driving up prices.
The author of "Global Spin," "Selling the Work Ethic" and
other books, Beder also examines what has been going on in Australia, Britain,
India and Brazil, where, she concludes, privatization of public utilities has
led to less reliable service, higher costs, increased pollution and cuts in
the workforce.
Beder explains why the currently hallowed nostrums of market forces, competition
and choice mean little when it comes to electricity, as distinct from products
like automobiles, clothing, books or films. With electricity, there is "a
physical need for supply and demand to be balanced at all times to prevent the
electricity grid from being damaged. This means that supply and demand cannot
be left automatically to the market...."
As for competition, Americans were already discovering in the latter part of
the 19th century that what began as competition often ended in monopoly. By
the early 20th century, publicly owned municipal utilities were a notable feature
of American life, offering lower rates to customers and bringing revenue into
the public coffers. In 1933, President Roosevelt established the Tennessee Valley
Authority, building large-scale hydroelectric facilities to take electricity
to rural areas.
A second viable route, favored by some shrewd power moguls, was to regulate
private utilities, not only to prevent them from gouging the public but also
to protect them from cutthroat competition that might force them to sacrifice
safety to expediency.
Too often, Beder explains, the need to make short-term profits led private companies
to delay or abandon expensive but necessary long-term projects like building
new generators.
If publicly owned utilities have been such a boon, why a campaign to privatize?
If regulation of private utilities has been an American success story, why a
campaign to deregulate? And if privatization and deregulation have led to higher
prices, shortages, pollution, layoffs and disregard for safety, why do so few
members of the victimized public seem to be aware of the problem? This twofold
question is at the heart of Beder's book.
What caused the change in public opinion that brought on this deregulatory revolution?
From the start, in the last years of the 19th century, private companies fought
to wrest control of electricity from municipal companies.
They organized a campaign to portray municipal companies as "socialistic,"
hence "Communistic," hence "un-American." This was a campaign
of enormous scope, subtlety and sophistication, as Beder shows.
From 1928 to 1934, the Federal Trade Commission investigated the power companies'
propaganda campaign and concluded that "no campaign approaching it in magnitude
had ever been conducted except possibly by governments in wartime."
Along with the standard tactic of lobbying politicians, the energy industry
launched a huge grass-roots campaign. Leaflets extolling the virtues of privately
owned companies were churned out by the hundreds of thousands and distributed
to schools.
Power companies regularly bought millions of dollars worth of advertising space
in newspapers, not just to get their message across to the public but also to
be able to threaten to pull their advertising if a newspaper endorsed public
programs or criticized private ones.
The National Electric Light Assn., formed in 1885, had committees surveying
school textbooks, targeting those that mentioned successful examples of public
ownership. They also commissioned textbooks, which, naturally, sang the praises
of private ownership.
Beder tells us how power companies got into the business of funding professorships
and research at universities to promote the kind of thinking that favored their
cause.
They also found ways of inserting their spokespersons into a broad spectrum
of civic and social life.
Lucidly written, strongly argued, highly informative and deeply alarming, "Power
Play" should serve as a wake-up call -- unless we've been too thoroughly
brainwashed to smell the coffee.
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