Texas Freeze Illustrates a Failed Economic System

The Texas Freeze illustrates just some of the shortcomings of conservative economics as a basis for public good. The nation's problems will only get worse the longer we pretend private solutions are best for all situations.

"In Texas, everybody agreed that everybody needed a robust electricity grid. But nobody wanted to pay for it."

But notice something important: the mainstream media never discusses the fact that a failed economic system is at the heart of so many of our nation's woes. And they won't, either, because they are the public relations arm of the owners of that system and the owners are making out like bandits. So, we need to discuss the problems ourselves.

The first problem with conservative economics is that it wants to imagine that only private economic interactions are legitimate, and that public intervention in the economy is illegitimate.

The truth is that public goods are ones that benefit everybody, but where it is difficult to assign individual ownership for the benefits. That makes it difficult to collect individual payments for the services. The result is underinvestment in public goods.

Hurricane Karina, in New Orleans, in 2005, exposed the failure of inadequate investment in public infrastructure. In that case, it was in the levees that were supposed to protect the city, but that had not been sufficiently maintained, for years.

Adequate investment would have cost tens of millions of dollars, but would have averted tens of billions of dollars of damage. Private motivations made such allocations uneconomical. More than 1,800 people died and the city has still not fully recovered.

The coronavirus pandemic exposed the chronic underinvestment in public health infrastructure. The U.S. response to the pandemic has been one of the worst in the world, with almost half a million people dead because of it. We see its effects, still, today, in the haltering testing and vaccination programs.

The damage to the society from the pandemic and the failed response has been incalculable, though we can calculate that 2020 was the worst year of economic performance in 75 years. Tens of millions of people have been harmed, many grievously, with poor and minority communities--those with the least economic power--bearing the brunt of the costs.

A second problem with conservative economics is that it wants to maximize private profits in the short run, so fails to invest adequately in the long run.

"The Republican response is typical Republican blame-shucking: it was the Green New Deal, which doesn't exist except as a concept, and AOC, a second-term Congressperson who lives in another state."

In Texas, everybody agreed that everybody needed a robust electricity grid. But nobody wanted to pay for it. It has been known since 2011, the last crisis, that this kind of freeze would inflict this kind of damage on this many people. But rather than bear the honest costs, Republican authorities up and down the state simply kicked the can down the road.

We're now down the road and the effect is catastrophic. The Republican response is typical Republican blame-shucking: it was the Green New Deal, which doesn't exist except as a concept, and AOC, a second-term Congressperson who lives in another state. It's beyond irresponsible. It is immature, and reckless.

The deindustrialization of the U.S. economy over the past four decades is a case of issues one and two, above, coming together. Private parties dismantled the largest manufacturing base in the world in order to maximize private profits in the short run. It devastated the larger economy and society, giving rise to the seething rage that is Trumpism.

The U.S. has an unambiguous public interest in a vibrant economic foundation. But that is being undermined by leaving so many essential decisions only in private hands. The fallout--Trumpism, and its efforts to reverse a national election--threatens our democracy, a negative spillover from the economy to the constitutional basis of our society itself.

A final flaw in conservative economic thinking is that adaptation to change is resisted unless the benefits can be captured by those who already hold power and wealth.

This is why it is impossible to reform the U.S. health system. We pay twice what other industrial nations pay for health care but get inferior results. People suffer higher costs and worse outcomes, while the nation bears a burden to GDP of about 10%, making the entire economy that much less competitive in world markets.

That excess 10% of GDP--amounting to about $2 trillion a year--flows into the pockets of the very rich, who own the pharmaceutical and hospital and insurance companies. And media companies. They invest billions in politics and media to protect trillions in profits, meaning that things are all but impossible to change.

Similarly, with climate change. The science is clear: pumping carbon into the atmosphere threatens cataclysmic planetary damage. But the oil companies have a death-grip on Congress, with the result that something as beneficial as the Green New Deal is invoked only as an epithet by conservatives rather than as the godsend that it could be.

If we cannot, will not, adapt to a changing climate by changing our energy choices, we will inflict existential damage on the planet and every life form on it. And that, to protect the stratospheric profits of a few dozen oil companies and the few hundred families that own most of them.

"If we cannot, will not, adapt to a changing climate by changing our energy choices, we will inflict existential damage on the planet and every life form on it."

Underinvestment in public goods. Short term profit maximization. And resolute resistance to essential change. These limitations of our conservative economic ideology inflict trillions of dollars a year of costs on the American economy and all of its members. Unless they are changed, they will continue to enervate, to weaken and drain, the economy, the constitutional order, the society, and, ultimately, the planet.

The mainstream media are not going to inform us of these failings because the system is working like a charm for its owners. They have been glutted with the greatest transfer of wealth in the history of the world. That is the economic news the media should be talking about.

Don't hold your breath. We need to begin changing our fundamental ethic, from "I'm getting mine. Screw you," to "We're all in this together." Because we are. Pretending we're not, in order to satisfy a destructive ideology, doesn't change the outcomes, or reduce the temperature. Just ask the people freezing in Texas.