Magical Thinking Is Why Socialists Get Everything Wrong

What is the source of the wealth of a nation? That’s actually the question addressed by Adam Smith in “The Wealth of Nations.” Smith doesn’t put it in these exact terms, but his answer lies in some combination of hard work of the people plus figuring out how to work more efficiently through specialization and exchange.

And then there’s the other theory that the wealth just appears somehow, by luck or magic (or maybe by oppression of marginalized peoples). Which theory you buy into has everything to do with what you might think are appropriate public policies.

At Hot Air on October 16, David Strom embeds a clip of Bernie Sanders and AOC appearing together the previous day on CNN with host Kaitlin Collins. In the clip, Sanders launches into a rant, where he starts by declaring that in the U.S. we have a “housing crisis” and a “healthcare crisis” and an “education crisis.” And then he gets to this key quote:

We're living in the richest country in the history of the world. Right. Alright, you tell me why we're the only nation not to guarantee healthcare to all people. The only nation, not to guarantee paid family and medical leave. Why We have a $7 25 cents an hour minimum wage. 

Bernie clearly thinks this is shameful. That conclusion follows from a worldview where the country’s wealth came not from hard work and specialization and exchange, but rather from luck or magic or something like that. Apparently, Bernie has never stopped to consider that maybe we are the richest country in the world precisely because we don’t have the government dragging down the productive economy by raising taxes to provide, as an example, free healthcare to “all people,” which is a term that includes not just the poor but also the well off and the productive and even the rich. Instead, we provide the free healthcare only to the poor (with a very broad definition of that), and expect the majority of the citizens who are capable of doing it to provide for themselves. That’s how we free up resources to enable the people to apply them to productive uses and make the country wealthier.

If you look around, you can find endless examples of politicians — mostly of the Democratic persuasion — proceeding on the same assumption that wealth has come from luck or magic and now the only thing left to do is to issue government orders to achieve fairness and justice. For a second example today, I’ll take New Jersey Democratic gubernatorial candidate Mikie Sherrill and her views on electricity generation.

Here’s some background on the Sherrill situation. Back in June the electric utilities in New Jersey increased rates by what they say is an “average” of 17-20%. Here is a piece from the Regional Plan Association reporting on that event. An average of 17-20% is high to begin with, but many New Jersey residents have reported that their own increases range up to a doubling of rates, or close to it. Unsurprisingly, many are upset. Republican gubernatorial candidate Jack Ciattarelli has been making some headway blaming the increase on the current Democratic Governor, Phil Murphy.

And in fact Ciattarelli is completely right. Murphy has gone all in on the intermittent renewable energy fantasy, apparently never bothering to read the 50 or more posts at this website explaining in excruciating detail why increasing intermittent wind and solar generation would inevitably multiply the cost of electricity to consumers. Here is a piece from Philly Voice on October 19 explaining the basics of the Murphy energy and electricity policy as his term winds down. Excerpt:

Murphy's energy goals were always ambitious. In successive pronouncements, the governor called for New Jersey to draw 100% of its energy from clean sources, first by 2050 and then by 2035.

So New Jersey built lots of solar farms, and shuttered plants that used fossil fuels. Meanwhile, ambitious plans for offshore wind did not materialize (they would only have made things worse):

Murphy presided over a broad expansion of solar power in New Jersey, his greater plans to produce thousands of megawatts in offshore wind generation ultimately failed to create any new power, even as some existing power plants were shuttered, reducing the electricity New Jersey sends to its multi-state grid. . . .

Not mentioned in the Philly Voice piece, but covered in the RPA write-up, is that as it closed power plants New Jersey has had to buy more power in auctions from its regional grid, PJM. Of course, it now needs power when the intermittents aren’t working, which means it must buy just when everyone else wants to buy, and thus pay premium prices at the auctions.

So what is Sherrill’s answer? Declare a “State of Emergency” and order a freeze of utility rates! Here is Sherrill’s webpage laying out her “plan,” if you want to call it that. Some key quotes:

Utility costs are out of control in New Jersey. Families are spending almost their entire budget just to pay the electric bill this summer. It’s time for action, because people just can’t wait any longer. So on Day One as New Jersey’s next governor, I’m going to declare a State of Emergency on Utility Costs and freeze your utility rates. . . .

Then there’s chasing down the hoarders and wreckers or other hobgoblins who are making the electricity expensive:

I’ll immediately open up [the utilities’] books to see where rising costs to families are going, . . . I will instruct my Attorney General to take Trump and New Jersey’s grid operator, PJM, to court — in coordination with governors in our region — to force them to end their mismanagement. . . .

And don’t forget building more of those fantasy solar panels and battery farms that, after all, provide the “cheapest” electricity:

This means immediately breaking ground on new solar and battery storage projects. . . .

To her partial credit, Sherrill does concede a need to keep some natural gas and nuclear in the mix, at least for now. But the overall thrust of her approach is that producing electricity is an easy job to be done by the little people. If rates are going up it can’t because of counterproductive government policy, and therefore it must be because bad people are ripping the consumers off behind their backs.

Good luck to New Jerseyans if you elect this half-wit. If you do, you will be in for a fate not so different from that of New York, or Germany.