Delusions of Power

Friday, 28 March 2003 21:33 By Paul Krugman, Truthout | name.

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Delusions of Power 
New York 0aTimes

Friday 28 March 2003
They considered themselves tough-minded 0arealists, and regarded doubters as fuzzy-minded whiners. They silenced those who 0aquestioned their premises, even though the skeptics included many of the 0agovernment's own analysts. They were supremely confident and yet with shocking 0aspeed everything they had said was proved awesomely wrong.

No, I'm not talking about the war; I'm talking about the energy task force 0athat Dick Cheney led back in 2001. Yet there are some disturbing parallels. 0aRight now, pundits are wondering how Mr. Cheney who confidently predicted that 0aour soldiers would be "greeted as liberators" could have been so mistaken. But 0aa devastating new report on the California energy crisis reminds us that Mr. 0aCheney has been equally confident, and equally wrong, about other issues.

In spring 2001 the lights were going out all over California. There were 0ablackouts and brownouts, and the price of electricity was soaring. The Cheney 0atask force was convened in the midst of that crisis. It concluded, in brief, 0athat the energy crisis was a long-term problem caused by meddling bureaucrats 0aand pesky environmentalists, who weren't letting big companies do what needed to 0abe done. The solution? Scrap environmental rules, and give the energy industry 0amultibillion-dollar subsidies.

Along the way, Mr. Cheney sneeringly dismissed energy conservation as a mere "sign of personal virtue" and scorned California officials who called for price 0acontrols and said the crisis was being exacerbated by market manipulation. To be 0afair, Mr. Cheney's mocking attitude on that last point was shared by almost 0aeveryone in politics and the media and yes, I am patting myself on the back 0afor getting it right.

For we now know that everything Mr. Cheney said was wrong.

In fact, the California energy crisis had nothing to do with environmental 0arestrictions, and a lot to do with market manipulation. In 2001 the evidence for 0amanipulation was basically circumstantial. But now we have a new report from the 0aFederal Energy Regulatory Commission, which until now has discounted claims of 0amarket manipulation. No more: the new report concludes that market manipulation 0awas pervasive, and offers a mountain of direct evidence, including phone 0aconversations, e-mail and memos. There's no longer any doubt: California's power 0ashortages were largely artificial, created by energy companies to drive up 0aprices and profits.

Oh, and what ended the crisis? Key factors included energy conservation and 0aprice controls. Meanwhile, what happened to that long-term shortage of capacity, 0awhich required scrapping environmental rules and providing lots of corporate 0awelfare? Within months after the Cheney report's release, stock analysts were 0adowngrading energy companies because of a looming long-term-capacity glut.

In short, Mr. Cheney and his tough-minded realists were blowing smoke: their 0areport described a fantasy world that bore no relation to reality. How did they 0aget it so wrong?

One answer is that Mr. Cheney made sure that his task force included only 0alike-minded men: as far as we can tell, he didn't consult with anyone except 0aenergy executives. So the task force was subject to what military types call "incestuous amplification," defined by Jane's Defense Weekly as "a condition in 0awarfare where one only listens to those who are already in lock-step agreement, 0areinforcing set beliefs and creating a situation ripe for miscalculation."

Another answer is that Mr. Cheney basically drew his advice about how to end 0athe energy crisis from the very companies creating the crisis, for fun and 0aprofit. But was he in on the joke?

We may never know what really went on in the energy task force since the Bush 0aadministration has gone to extraordinary lengths to keep us from finding out. At 0afirst the nonpartisan General Accounting Office, which is supposed to act as an 0ainternal watchdog, seemed determined to pursue the matter. But after the midterm 0aelection, according to the newsletter The Hill, Congressional Republicans 0aapproached the agency's head and threatened to slash his budget unless he backed 0aoff.

And therein lies the broader moral. In the last two years Mr. Cheney and 0aother top officials have gotten it wrong again and again on energy, on the 0aeconomy, on the budget. But political muscle has insulated them from any adverse 0aconsequences. So they, and the country, don't learn from their mistakes and 0athe mistakes keep getting bigger.

(In accordance with Title 17 U.S.C. Section 107, this material is 0adistributed without profit to those who have expressed a prior interest in 0areceiving the included information for research and educational 0apurposes.)

Last modified on Monday, 21 April 2008 13:37