Thursday May 31 02:14 PM EDT

Get Out Of California

By Matt Carolan, Interactive Week

Some years ago a very enterprising businessman in my neighborhood ran a clever ad campaign for his beachfront bar - the Oak Beach Inn. He had wrangled for years with elected officials about all kinds of issues, from noise, to zoning, to expansions, to taxes. Finally, he came up with a slogan that captured his frustration and galvanized his patrons. The line: "Get out of New York State before it's too late."

He advertised that line everywhere, even hanging it from the overpasses on the highways near his establishment. Some years later, he followed his own advice and fled to Florida to open a new bar. The politicians, meanwhile, are still wrangling with him over the sale of his old property.

I think of this clever gentleman every time that I read the headlines from California about the ongoing energy crisis and its rolling blackouts. How is anybody supposed to do business in such an unpredictable environment?

The previous Wilson administration, the state legislature, and the state's energy companies all deserve blame for conspiring to foist faux deregulation on California energy consumers. California energy consumers however deserve blame also, for expecting magical powers from the government in the form of "price caps" that would insulate them from responsible decision making.

Now the price is being paid in rapidly rising rates and other punishments like the blackouts.

Unfortunately, California's elected officials aren't likely to change their stripes. In a recent piece written for National Review Online, a California Republican strategist and former Wilson staffer suggested that the Golden State's crisis provided a ripe political opportunity for the state GOP to destroy Gov. Gray Davis (news - web sites). He didn't lay any blame for the problem on his former employer or his party, where it belonged.

But neither, by the way, is Governor Gray Davis laying proper blame - which at this point of the crisis also falls on him. Rather than level with individual energy consumers, Davis is determined to distract and demagogue the issue and whip up a populist frenzy against the energy companies - especially the Texas ones - about "price gouging." He has also recently hired two character assassins from the Clinton White House to run his public relations operation. Davis is determined to emerge from this fiasco as the people's choice, perhaps strong enough for a shot at the White House.

But price gouging did not destroy the state's energy infrastructure, including driving some of the state power companies into bankruptcy. "Price gouging" to California's elected officials could be anything that interferes with the success of those irresponsible, pandering "price caps" - including spikes in prices that emerge based on fear of imposed price caps and other political manipulations of supply - or even ordinary market factors.

Unfortunately, recent polls have shown to no surprise that the public would rather buy Davis' rhetoric than believe that it must endure any hardship to right the market, including free-floating prices.

With the motives of many of the state Republicans as well as of Governor Gray Davis polluted by ambition, California isn't looking like the place to do business these days. Already, some tech businesses are pondering leaving because of the high power prices, now that the bill is coming due.

But maybe somewhere, at some drinking establishment overlooking the Pacific, sitting in the dark of a rolling blackout, some businessman has also figured out that the situation isn't going to change at all, because the resolution of it lies with people who can't be trusted. It wouldn't surprise me then to hear people start saying to each other, "Get out of California before it's too late." And they would be right.

Matt Carolan is Online News Editor at Interactive Week, and a columnist at Newsday.

-- Anonymous, June 01, 2001