Free Market Failure

Matt Stoller, over at MyDD, makes a salient point regarding the effectiveness of the free market. Take it away Mr. Stoller:

All over the country, America is enjoying a series of free market blackouts. California, New York City, and St. Louis have all been hit with electricity outages due to a poor electricity infrastructure. This infrastructure is a result of a reliance on a free market and tax cuts instead of public infrastructure investment.

Gotta love that free market, it really handles hurricanes, wildfires, and heat waves exceptionally well.

Indeed. There is a need for this discussion on a wider range of topics, healthcare being at the top of the list. Decades of conservative dominance on the issue of deregulation has led us to an interesting and not very good state of affairs with regard to a number of industries. By and large, free markets work exceptionally well when supply and demand are relatively elastic. Things tend to break down though, when the demand for a good or service becomes a necessity. The situation is often worsened by having but one choice of supplier. When you shop for groceries, you typically have a several options among stores to shop and the products offered. When you are rushed to the emergency room, you cannot haggle with the doctor or shop around other hospitals to compare prices. For that matter, it’s the same with energy or clean air or clean water. One’s demand for certain goods and services becomes concrete when those goods and services are a matter of life and death. That is why we regulate pollution emissions. As a society, we deem potable water more important than maximizing profit. I think that logic should be extended to other industries that, in my view, are equally important.

The net effect of deregulating these necessity industries is to throw consumers completely at the mercy of the supplier. And the supplier must sometimes make choices between providing the best possible service for the consumer and the best possible profit margin for shareholders. Hence, rolling blackouts in 100+ degree weather has resulted in the nearly 30 deaths in California.