Document:California Press Release 22 May 2001 Is California Becoming the Next East Germany

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14547 Titus Street, Suite 214
Panorama City, CA 91402
For immediate release: May 22, 2001
For additional information:
Juan Ros, Executive Director
Phone: (818) 782-8400

Is California becoming the next East Germany? Libertarians think so

LOS ANGELES -- Inadequate and wrongheaded solutions by California's politicians to the ongoing electricity crisis is threatening to turn the Golden State into a throwback to the centrally-planned economies of eastern Europe unless courageous decisions are made as quickly as possible, state Libertarians warned today.

"California was the hotbed of entrepreneurship and innovation just a year ago. Today shortages and blackouts are becoming commonplace, even expected," declared Libertarian state chairman Aaron Starr. "Rather than demonstrate leadership and courage, our elected leaders are turning to the failed policies of East Germany and Cuba in a colossally foolish and senseless scheme to control the crisis."

East Germany? Cuba? Aren't Libertarians overreaching in their comparison? "Absolutely not," noted Starr.

"Centrally planned economies always face shortages of different commodities because they strangle supply by capping prices and controlling distribution. That's why the old Soviet Union saw long lines for such abundant products as bread and milk."

Starr continued, "Gray Davis and our elected lawmakers have imposed retail price controls which they refuse to lift. They are asking the federal government to impose wholesale price controls. They control the transmission of power through the California Independent System Operator (Cal-ISO). The result, to anyone who has taken basic economics, is a shortage of that which the government is trying to control."

Libertarians point out that the state is even acknowledging that shortages will continue. Yesterday, Cal-ISO announced that Californians would receive 30 minutes' warning before blackouts are imposed this summer.

"Where else do we see shortages and blackouts on a regular basis? Only in countries like Cuba," Starr added.

Libertarians have been criticizing state policy on the electricity crisis for months, especially plans to seize private power assets and place them under state control. "That is the most laughable scenario," Starr said. "The state government has openly demonstrated that it has no idea how to act like a utility. What evidence exists to show that actually owning the power plants will be any different?"

Concluded Starr, "History has shown that controlling commodities leads to shortages and rationing. Californians deserve better leadership from their elected officials. Libertarians know that there is no easy way out of the current crisis, but as long as politicians keep proposing solutions that have failed massively in other countries, the crisis will not be alleviated."