Fatal blows to corporate power

The fallout from the current phase of capitalism has become more manifest globally in 2016, provoking unexpected political responses. However, the people most severely impacted by the current economic crisis have largely chosen to support political figures and positions[i] contrary to those that have been elaborated for years by the alter-globalisation left, also known as the global justice movement.

In part, this is due to the fact that in the first round of response to neoliberalism in Latin America, the progressive political forces failed,[ii] whether by weakness or design, to dismantle the mechanisms contributing to the consolidation of the “extreme capitalism” which is hegemonic globally today. This form of capitalism presents, in addition to its classic contradictions, an “extreme concentration of wealth and a tendency towards the extreme concentration of ownership of corporations”[iii], as typified in the process of monopoly via mergers and acquisitions, as we see now with the planned mergers of six of the world’s biggest seed and agro-chemical companies into just three mega-corporations (Monsanto-Bayer, Dow-Dupont, and Syngenta-ChemChina)

However, it is noteworthy that it is not the left alter-globalisation movements that have been defeated in 2016. Rather, these have transformed themselves into actual political forces in ascendency: partly converging around Bernie Sanders, Jeremy Corbyn, and Podemos who have emerged as beacons of hope. What has been definitively defeated in 2016 is what we can call ‘social-democratic neoliberalism’. As Naomi Klein has written: “It was the Democrats’ embrace of neoliberalism that won it for Trump.”[iv]

This new international conjuncture should encourage the re-creation of a new wave of alter-globalization, strengthened by the lessons of recent defeats, and galvanised by the hopes that are inspiring the rise of a left opposition against the emerging fascist trends globally, in both the North and the South. As William Robinson warned presciently in 2011, “the counterweight to 21st century fascism must be a coordinated fight-back by the global working class. The only real solution to the crisis of global capitalism is a massive redistribution of wealth and power – downward towards the poor majority of humanity. And the only way such redistribution can come about is through mass transnational struggle from below.”[v]

The current debate at the UN Human Rights Council (UNHRC) on the creation of a Treaty addressing human rights and transnational corporations and other enterprises offers a great opportunity to confront the central actor in the global capitalist economy, what is today commonly referred to as “corporate power,” and to contribute to the emergence of a new wave of anti-neoliberal activism. This opportunity has been created in part through ongoing alter-globalisation struggles, in which the “Campaign to Dismantle Corporate Power, End Impunity and Reclaim Peoples Sovereignty[vi]” is a protagonist. This global Campaign brings together affected communities, movements and social organisations from all continents. In June 2014, mobilisations by the Campaign and the Treaty Alliance[vii] at the country level and in Geneva, both within and outside the UN Human Rights Council, culminated in a successful vote to open a formal UN process to prepare a treaty.[viii]

the current conjuncture of struggles, key areas of corporate power are vulnerable to fatal blows – which together with the UNHRC process can contribute to advancing this emerging wave of alter-globalisation struggle.
1-Ending the legal impunity of corporations

From the early 1980s, the global corporate elite began an uninterrupted assault on human rights and the public interest. This offensive has become visible in the erosion of state sovereignty, dismantling the welfare state, privatisation of public services, economic deregulation, trade and investment liberalisation and the establishment of the primacy of the rights of corporations and other investors over peoples’ rights.

At the international level, free trade and investment agreements in their various forms combine with the policies of the WTO, IMF and World Bank to provide the ultimate guarantee of protection to capital. Under these policy regimes, Transnational Corporations (TNCs) have acquired rights exceeding those of States – made possible through such punitive mechanisms as ISDS (investor-state dispute settlement) through which corporations can sue states for billions of dollars while states cannot sue or sanction corporations. The ISDS mechanism has been operative in the Americas since the early 1990s, when it was embedded in Chapter 11 of NAFTA and it is currently being aggressively pursued in TTIP, CETA and TPP as well as in other ‘new generation’ agreements.

The result of this policy framework has been the construction of a veritable architecture of legitimation and impunity, which has prioritised the rights of investors over human rights, that is, over peoples’ rights. This unprecedented privilege, the guarantee that corporations’ rights will be respected regardless of the effects of their operations, is one of the pillars on which ‘extreme capitalism’ is based. It is part of the foundation of the hypertrophic corporate power – the Lex Mercatoria – that rules in the world today.[ix] It is this principle of the primacy of corporate rule that the in-process UN Treaty on the regulation of TNCs could address. In proposing that human rights be put in their rightful place, above any other norm of international law,[x] such a Treaty moves to make the current arbitrariness permitted by international trade and investment agreements illegal, and to identify certain corporate operations as international crimes.
2- Cutting the link between economic power and democracy

The increasing economic asymmetry between corporations and states, and between the corporate business elite and other citizens, now more extreme than at any other time in recent history, is another defining characteristic of contemporary capitalism. This asymmetry leads to, and is further perpetuated by, its political expression, the “privatisation of democracy”. Mechanisms of corporate capture such as lobby organisations, revolving doors between corporations and government, election campaign financing, and other legal and illegal channels, as well as corruption operating at the executive, legislative, and judicial levels of contemporary democracies, transform the most “common good” of society into a mechanism to benefit the few. Susan George refers to this as illegitimate and unaccountable corporate power and explains that “groups of companies from, say the United States and European countries or Europe as a whole come together to obtain results they perceive as being in their collective interest. ‘Obtaining results’ includes political results and the capacity to obtain them from governments is inexorably growing. This, to me, implies a serious breakdown of democracy”.[xi]

The privatisation of democracy co-opts institutions created for the common good and the public interest, transforming them into tools to guarantee and increase the private interests of those who seize control of them. A direct or indirect plutocracy, more and more scandalous, excludes the majority of people and produces in them the growing apathy or disenchantment with democracy that we see increasingly in the world today. Incredible as it may seem, authoritarian and fascist voices (from Trump to Le Pen) have begun to emerge on the global stage and are echoed in public debate and represented in several parliaments. Cutting the link between economic power and democratic institutions is one of the objectives of the work on the UN Treaty and this is essential if popular movements are to recover the sovereignty of the people, or as W. Robinson put it, to move towards the “redistribution of power”.[xii]

Corporate capture is reproduced internationally in the institutions of so-called “global governance” – a euphemism that hides the undemocratic nature of the international system manifested in the WTO, IMF and WB. These institutions are totally captured by the current corporate economic interests that, at present, dictate their agendas and the financing of their international programmes. This overall trend is manifested in the transfer of governance of “conflicted policy area’ from intergovernmental spaces to multi-stakeholder spaces, strongly influenced, if not led, by the interests of the corporate sector. This trend is being aggressively promoted by the World Economic Forum through its “Global Re-design Initiative (GRI),” which promotes “multi-stakeholder governance” as its preferred option for governance. This is not an ad hoc strategy – it is in fact one of the main strategies put forward by the Davos class, the global economic elites, in response to the financial and other inter-related crises of 2008.[xiii]

The multi-stakeholder approach is already quite advanced, mostly in relation to the nexus of food, nutrition and health and is exemplified in the SUN (Scale Up Nutrition) initiative which has a significant concentration of business corporations and a private sector driven agenda. In addition, multi-stakeholderism excludes those who do not agree, and bypasses legitimately established intergovernmental food and nutrition policy spaces, such as the CFS, the World Health Organization (WHO) and the FAO.[xiv]
3- Ending the financial fiesta

One of the central engines of capitalism today is finance, which, in turn, is currently the most globalised dimension of the international economy. It is well known that the financial sector dominates productive capital and that there are banks and investment funds far more powerful than many UN member states. Finance imposes a logic of immediate profit, which “naturally selects” the most profitable businesses, generating standardisations of all kinds, obliterating diversity (cultural, gastronomic, etc.), and depersonalising decisions to prevent any connection with or accountability towards those impacted. As Sivanandan points out, key players in mega banking scandals refuse responsibility, as when Bob Diamond, CEO at Barclay’s Bank at the time of the manipulation of the Libor lending rates passed responsibility to ‘lower orders’ and called for a moratorium on bankers’ apologies for their role in the financial crisis.[xv]

The power of finance corporations is based on two key elements: the extreme deregulation that allowed the invention of infinite financial “products,” multiplying opportunities for profit while increasing the overall risk for the system (as indicated in the financial crisis of 2008); and the ability to evade taxes and facilitate the evasion of taxes by third parties (even through criminal practices such as money laundering or tax evasion). In many countries, no taxes are levied on financial or stock exchange transactions at all, or minimal proportional fees are levied on profits generated by speculation. Tax havens and agreements to avoid double taxation, along with technological solutions, have served as central mechanisms to facilitate the movement of capital across the planet with almost complete freedom to avoid taxes, hide wealth, exploit workers, and practice ‘wage evasion’[xvi] and speculate with the assets of countries vulnerable to international financing via exorbitant interest payments and extortionate debt.

According to Walden Bello it has taken the global financial crisis to deal another blow to neoliberalism “with its sweeping away of the Rational Choice Theory and the Efficient Markets Hypothesis that had been the cutting edge of the globalisation of finance.”[xvii] However, up to the present, the Banking corporations have succeeded in resisting serious re-structuring and substantive regulation.

If financial institutions are to work for the benefit of the entire population, it is urgent to insist on diminishing the entrenched structural power of the finance establishment in the framework of global corporate power by, among other solutions, promoting strict financial regulation, abolishing tax havens, eliminating double taxation agreements, and limiting the size of banks and funds.
4- Stopping the commodification of knowledge

Industrial patents – particularly in pharmaceuticals – are a favoured strategy of global capitalism for the savage appropriation of enormous portions of the wealth produced by human beings. Corporations, especially over the last 40 years, have taken on this role of establishing a structure of national and international laws that guarantee the control of patents on scientific and technological discoveries. Such corporate patent holders generally enjoy many years of exclusive use, that is, the sole right to produce and sell their products, at a price they consider ‘fair’ – a price that will allow them to earn as much profit as possible.

The linking of Intellectual Property Rights (IPRs) and trade regimes within the World Trade Organisation was first proposed by the US government at the behest of US corporations and strongly opposed by developing country governments.[xviii]

In the context of this international regime governing patents (further expanded in new generation FTAs) corporations do not take into account whether drug prices, for example, deprive poor and low-income patients of access to life-saving hepatitis C treatments or anti-viral AIDS drugs; whether peasants are robbed of the possibility to reproduce their own seeds; or whether access to technologies that could contribute to solving problems like climate change and hunger remain in the control of corporations.

The patent regime, as in the commodification of knowhow and knowledge, forms the basis for capital accumulation in many economic sectors today: communications, energy, health, medicine, food, transport and many others. Interrupting this commodification of knowledge as a collective human activity, would not only contribute to the dismantling of corporate power in many sectors, but would also be instrumental in enhancing human well-being. If the corporate patent regime did, at any moment in history, play a role in accelerating the development of technological knowledge and inventions, this is no longer the case today.[xix] Instead, as a rule, the state through its public institutions invests more heavily than the private sector, generating the conditions that make scientific and technological progress possible. There are no valid reasons why public resources should be transformed so absurdly into private profit.

5- Cutting off decisively corporate access to the common goods of nature

Definitively establishing the public character of nature and administering its use for the common good by cutting off unrestricted access and exploitation by mining, energy and agricultural corporations seems like an obvious goal. However, in practice, the artifices of propaganda and the co-optation of common sense by economic interests transform this into something which is not obvious, something for which we must fight.

A world at imminent risk of climate and environmental disaster requires urgent decisions to end the wild extractivism behind many current environmental crises – toxification or devastation of the oceans, seas and rivers; land, soil, forests; and biodiversity. The solution to these crises cannot be in the hands of those who, instead of the logic of the common good, are acting out of the logic of profit. Thomas Berry called for “legal structures and political establishments that will know our way into the future is not through relentless industrial development”.[xx] As the broad range of climate justice movements emphasise, market solutions are false solutions which cannot provide a response to the current devastated environment.

Only an entirely public and participative administrative protection of nature can reverse the path towards collapse on which humanity currently finds itself. It is only this that can impose a real limit on, for example, the oil companies, and international food and mining corporations that have accumulated sufficient economic and political power to block civilizational advances indispensable for the survival of our species. Such an approach is outlined in the Marrakech Declaration developed by La Via Campesina and other social and democratic movements on the occasion of COP 22 which sees that “the implementation of those alternatives as well as other solutions aiming at putting an end to the greedy dominating capitalist logic, can become true only by united international and national struggles which make the power balance in favour of the peoples”.[xxi]

Ending the (mis)appropriation of nature can be another fatal blow which can be delivered to corporate power.

At least 5 hits: tactics and strategy for a second round of anti-globalization.

There are signs that, increasingly, the people of the world are exasperated with the violations of corporate power, and with the impunity and arrogance with which they have appropriated democratic instruments of national government and global governance. The challenge of this second wave of alter-globalisation is to organise and converge the strategies that can deliver at least these five fatal blows against the power of the corporations, and to turn resistances into the practice of alternatives. Significantly, the road to the first blow is already open with the binding Treaty process on Transnational Corporations at the UNHRC. This is the best opportunity we have currently to take a step towards realising the vision of a fair and sustainable world. Thanks for translation and comments to Jordan Bishop (ALAI) and Katie Sandwell (TNI). The original Spanish version of this article forms the introduction to edition 520 (December 2016) of ALAI’s Spanish language magazine América Latina en Movimiento, titled “Transnacionales y Derechos Humanos” (transnationals and human rights), published in co-edition with the Transnational Institute (TNI). This English version of the article has some additional observations and expanded endnotes.

— source tni.org by Gonzalo Berrón, Brid Brennan

Spying on Students

School children are being spied on by tech companies through devices and software used in classrooms that often collect and store kids’ names, birth dates, browsing histories, location data, and much more—often without adequate privacy protections or the awareness and consent of parents, according to a new report from Electronic Frontier Foundation (EFF).

EFF’s “Spying on Students: School-Issued Devices and Student Privacy” shows that state and federal law, as well as industry self-regulation, has failed to keep up with a growing educational technology industry.


— source eff.org

MongoDB startup hired by Aadhaar got funds from CIA VC arm

Two weeks ago, Max Schireson, chief executive of MongoDB, a New York-based technology startup, was in New Delhi to sew up a very important contract for his company — with the Unique Identification Authority of India (UIDAI). MongoDB, which makes software that helps manage large databases, especially unstructured data, has raised $231 million (Rs1,400 crore) since being founded in 2007. Some of its funding is from In-Q-Tel, the not-for-profit venture capital arm of CIA. Besides CIA, In-Q-Tel works with National Geospatial-Intelligence Agency, Defense Intelligence Agency and Department of Homeland Security Science and Technology Directorate. Schireson, the CEO, was also one of the national co-chairs for Technology for Obama, an interest group that campaigned for the reelection of President Barack Obama after his first term.

— source economictimes.indiatimes.com

Italy court blocks Uber services in Italy

A court blocked the use of smart phone apps for Uber cars UBER.UL in Italy on Friday, ruling that they constituted unfair competition. The court said Uber could not use its Black, Lux, Suv, X , XL, Select and Van phone applications nor could it promote or advertise its services in Italy, a court document showed. The court ruled in favour of a suit filed by Italy’s major traditional taxi associations.

— source reuters.com

Nobody reads the small print when they sign up to social media

The Children’s commissioner has warned that children as young as eight are signing up to social media terms and conditions without reading or understanding the agreements they are entering.

Let’s be honest, that probably goes for a lot of adults too – and most of these lengthy legal documents that we never bother to read include some rather unexpected clauses. Here are some of the more wide-reaching and most bizarre.

Facebook: you need to say within 48 hours if you change your phone number

By using or accessing Facebook you agree to its statement of rights and responsibilities, which includes the provision that if you change your phone number, you promise to update it on Facebook within 48 hours.

Facebook also obtains the permission to use any of your public posts, photographs or videos for anything, anywhere in the world, without paying you – and to sell them to others to do the same.

You also agree to your name, your picture, and your content appearing in connection with commercial, sponsored, or related content.

You must be 13 to use the service, and you also must agree not to publish any false personal information, or create more than one account.

Facebook specifically states that convicted sex offenders cannot use the service, and if you want to pursue a claim against Facebook, you have agreed to do it in the US District Court for the Northern District of California, or a state court located in San Mateo County.

Snapchat: it wants the rights to your voice for ever and ever and ever

You accept Snapchat’s terms by using the service. If you create or appear in live content, that gives Snapchat and its business partners the “unrestricted, worldwide, perpetual right and licence to use your name, likeness and voice”. You give it permission to do this forever – including in forms of media that haven’t been invented yet.

In theory, Snapchat is a great choice for sexting because the content is very personal and ephemeral. However, it is worth noting that when you use it, you have given Snapchat the right to “host, store, use, display, reproduce, modify, adapt, edit, publish and distribute” your content for the purposes of “operating, developing, providing, promoting and improving” the service. Snapchat also reserves the right to access, review, screen and delete your content at any time.

You are not allowed to create more than one Snapchat account, and if you change your phone number, you have promised to inform Snapchat within 72 hours.

Terrorists need not apply, however. You are specifically forbidden from using Snapchat if you appear on the US Treasury Department’s list of Specially Designated Nationals – the 1,000-page US government register of people and businesses facing economic sanctions for terrorism or drugs offences.

Have a dispute with Snapchat over something? Then you agreed that it must be resolved by the American Arbitration Association, unless you sent Snapchat written notice that you wanted to opt out of this within 30 days of first joining the service.
Instagram: it isn’t responsible if it misplaces your private stuff

As with many other services, Instagram’s terms of use state that it can use your images for anything, anywhere in the world without paying you, and sell them on to others to do the same.

It also explicitly states that you can be suspended from the service or have your username taken from you “for any reason”.

Instagram also reserves the right to not always disclose that sponsored content is sponsored.

It stipulates that none of your information or messages held on its system are deemed to be confidential, and Instagram is not liable if that information becomes public: “None of your Content will be subject to any obligation of confidence on the part of Instagram, and Instagram will not be liable for any use or disclosure of any Content you provide.”
WhatsApp: it promises it can’t read your encrypted messages

WhatsApp is much stronger on the privacy of your communications than Instagram. It explicitly states in its terms that “We’ve built privacy, end-to-end encryption, and other security features into WhatsApp. We don’t store your messages once they’ve been delivered. When they are end-to-end encrypted, we and third parties can’t read them.”

However, it also states: “Nothing in our Terms will prevent us from complying with the law.” This gives it an out should legal frameworks about encryption around the world change.

The company, owned by Facebook, has also caused controversy by sharing data with the social network for use in ad targeting.
Twitter: nasty tweets are not endorsed

Twitter takes the “Retweets are not endorsements” trope of many official bios to the next level, with its terms clarifying that Twitter does not “endorse, support, represent or guarantee the completeness, truthfulness, accuracy, or reliability of any Content or communications.” Probably just as well, given the level of nastiness that can take place on the platform.

As weird legal jargon goes these two sentences from Twitter are probably among the most oddly uninformative ever written into a contract: “Twitter has an evolving set of rules for how ecosystem partners can interact with your Content on the Services. These rules exist to enable an open ecosystem with your rights in mind.”

There appears, though, to be no specific clause against heads of state causing diplomatic incidents with their tweets.
YouTube: it suggest you print a copy of its terms and keep it for your records

Clause 2.4 of YouTube’s terms of service literally suggests “You should print off or save a local copy of the Terms for your records.”

It also states that you should only use the service if you agree to the terms, and you should not use the service if “you are not of legal age to form a binding contract with YouTube” – which has interesting implications for the amount of Minecraft videos on the service aimed at kids.

If you want to terminate the legal agreement you have made with YouTube by watching a video, you have to send it in writing. You’ll be able to find the postal address at the top of the terms and conditions that you printed off – assuming you can still remember how to do something as old-fashioned as posting a letter to a company.

— source theguardian.com By Martin Belam

Boycott Hyundai to end its complicity in Israel’s ethnic cleansing of Palestinian communities

The Boycott, Divestment and Sanctions Committee of Palestinian Citizens of Israel (BDS48) calls upon our Palestinian people in the homeland and the Diaspora, the peoples of the Arab world, and people of conscience worldwide to boycott and divest from Hyundai Heavy Industries (HHI), until it ends its involvement in Israel’s violations of our human rights, particularly in Jerusalem and the Naqab (Negev).

BDS48 is launching this boycott campaign at this particular moment in light of the extensive use of Hyundai equipment by the Israeli authorities in the recent demolitions of many homes of Palestinian citizens of Israel in the Bedouin village of Umm al-Hiran in the Naqab, on 18 January 2017, and in Qalansawa, further north, on 10 January 2017. According to Arabic media reports, the Israeli authorities are planning a second wave of home demolitions in Umm al-Hiran in the coming few days.

Despite being faced with documented evidence of its persistent complicity in Israeli ethnic cleansing policies against Palestinians and Syrians in the territories occupied since 1967, Hyundai has failed to stop its business-as-usual involvement. It has thus forfeited its responsibilities as stated in the UN Global Compact and the UN Guiding Principles on Business and Human Rights.

In Umm al-Hiran, Israeli armed forces destroyed many homes in the village, forcibly removing its Bedouin Palestinian population for the second time since the 1948 Nakba, injuring tens of peaceful protestors, and murdering the educator Yaquob Abu al-Qiyan in cold blood. The objective of this bloody conquest is to establish a Jewish-only colony on the ethnically cleansed village’s lands.

This latest crime by Israel’s regime of occupation, settler-colonialism and apartheid comes as part of its ongoing policy of gradual ethnic cleansing since 1948 and that has led to the forcible displacement of most of the indigenous Palestinian people from our ancestral land. Israel today has more than 60 racist laws that legalize and institutionalize its special form of apartheid against its indigenous Palestinian citizens.

Inspired by the massive global solidarity movement that helped to end apartheid in South Africa, and stemming from the moral responsibility that falls on the shoulders of citizens and institutions everywhere to end any involvement in human rights violations, we, as Palestinian human rights defenders in Israel, call on:

People of conscience around the world to boycott Hyundai products;
Institutions, investment funds and churches to divest from Hyundai and local councils to exclude the company from public tenders;
Hyundai workers and the Korean Confederation of Trade Unions (KCTU) to stand in solidarity with our peaceful struggle by pressuring the Hyundai management to stop the company’s complicity in Israeli violations of human rights. Our campaign is not intended at all to harm the interests of the company’s workers but to protect the rights of our people as stipulated in international law.

The achievements and impact of the global, Palestinian-led BDS movement for Palestinian rights have grown immensely in recent years, to the extent that Israel has recognized the movement’s “strategic” impact. BDS is today an essential pillar of the nonviolent Palestinian popular struggle for our inalienable rights under international law, most importantly the right to self-determination and the right of our refugees to return to their homes of origin.

Through this campaign to boycott Hyundai and your effective participation in it, we can pressure the company to end its involvement in Israel’s violations of human rights, just as several multinational giants were compelled by effective BDS campaigns to exit the Israeli market.

Veolia was the first to end its complicity in Israel’s human rights violations in 2015, followed by Orange telecommunication, CRH, and most recently G4S, the largest security company in the world, which sold almost all its illegal business in Israel.

Our people have decided to besiege our siege. Our campaign against Hyundai is part of this nonviolent human rights movement that has proven itself to be strategic and effective in isolating Israel’s regime of oppression academically, culturally and economically in order to exercise and protect our right as a people to live on our land in freedom, justice and dignity.

— source bdsmovement.net

When Econ 101 Goes Wrong

You all may remember that back in 2000-01 Enron engineered an artificial shortage of electricity in California, which sent prices skyrocketing. This was a harrowing affair, and ever since then California has been building new power plants. And building. And building. And building some more.

At the same time, demand for electricity declined after the Great Recession and then flattened out. But California kept building new plants anyway. As we all know, the result of higher supply and lower demand should be lower prices. However, as these three charts excerpted from the LA Times show, that’s not how things have worked out:

This seems inexplicable. Why have prices gone up? And why are California utilities continuing to build new power plants even as they’re mothballing recently built plants because there’s no need for them? Ivan Penn and Ryan Menezes explain:

California regulators have for years allowed power companies to go on a building spree, vastly expanding the potential electricity supply in the state. Indeed, even as electricity demand has fallen since 2008, California’s new plants have boosted its capacity enough to power all of the homes in a city the size of Los Angeles — six times over. Additional plants approved by regulators will begin producing more electricity in the next few years.

The missteps of regulators have been compounded by the self-interest of California utilities, Lynch and other critics contend. Utilities are typically guaranteed a rate of return of about 10.5% for the cost of each new plant regardless of need. This creates a major incentive to keep construction going: Utilities can make more money building new plants than by buying and reselling readily available electricity from existing plants run by competitors.

The over-abundance of electricity can be traced to poorly designed deregulation of the industry, which set the stage for blackouts during the energy crisis of 2000-2001….Instead of lowering electricity costs and spurring innovation, market manipulation by Enron Corp. and other energy traders helped send electricity prices soaring.

….State leaders, regulators and the utilities vowed never to be in that position again, prompting an all-out push to build more plants, both utility-owned and independent….By the time new plants began generating electricity, usage had begun a decline, in part because of the economic slowdown caused by the recession but also because of greater energy efficiency.

The state went from having too little to having way too much power.

“California has this tradition of astonishingly bad decisions,” said McCullough, the energy consultant. “They build and charge the ratepayers. There’s nothing dishonest about it. There’s nothing complicated. It’s just bad planning.”

There you have it. Econ 101 didn’t fail after all. Regulated utilities aren’t a real market economy, and California’s regulators have allowed epic overbuilding because of the trauma of the 2000 blackouts. Utilities have happily taken advantage of this because they make more money from building useless plants than they do from trading with other utilities.

Enron may be long dead, but its ghost lives on. California paid the price for Enron’s machinations in 2000, and now it’s paying the price again thanks to fear of another Enron happening someday. Plus we got Arnold Schwarzenegger out of the deal.1 It’s amazing how much damage a single greedy company can do.

1Schwarzenegger was elected in place of Gov. Gray Davis, who was recalled. But the recall was largely driven by anger over the blackouts and the subsequent rate increases. It never would have happened if not for the electricity crisis.

— source motherjones.com By Kevin Drum