Can you trade in panache for TV commercials?

The New York Times (via the Joe Kenehen Center) has an interesting article about privatization in Montana. It started as it always does: the privatizers ride into town and begin making pie-in-the-sky promises while begging legislators to accept cash and gifts.

…at the end of the 1997 legislative session, Montana Power, looking to get out of the stodgy, regulated utility business, pushed through a deregulation bill, which made its assets more attractive to prospective buyers. The company said the public would benefit, with lower costs and more consumer choices.

The Legislature, made up mostly of farmers, ranchers and small-business owners, approved the measure with little hesitation. "The dining, the free drinks, the contributions — it all paid off when Montana Power called in its chips," said Hal Harper, a former speaker of the Montana House, who has been both a Republican and a Democrat but is now out of politics. "We’re stuck with the bill."

Montana Power’s goal in all this, by the way, was to leap into a phone booth, strip off that stodgy "old economy" three-piece suit, and emerge revealed as… New Economy Man! Well, actually, it morphed into Internet service provider "Touch America," and immediately managed to lose "more than 90% of its market value."

After that brief-but-tasty just dessert, the privatization story comes to its usual conclusion.

The first shock of deregulation here was felt by business. In a fourth year of increases, power prices soared to unheard-of levels in 2001. Paper companies, mines and other industries that provide some of Montana’s few good-paying jobs began to close or lay off workers because they could not afford to pay their electricity bills… For residential consumers, whom the deregulation law shielded from the first four years of price jumps, bills started to go up this summer, and will rise again next summer.

And finally, the postscript, featuring the inevitable special pleading from privatizers.

Deregulation can still work, supporters say, if it is set up properly.

(Digression: You know who the privatizers remind me of? Hard-line communists. Again and again, their policies fail catastrophically. Again and again, they whine that it’s not fair to judge them based on their conspicuous failures, because their system wasn’t implemented perfectly. Electric prices skyrocketing everywhere they’ve been privatized in the Northwest? It’s because the legislature mucked up privatization by compromising. Argentina, until recently the poster-child for free-market reform, collapsing? It’s cronyism ruining what otherwise would have been a great privatization. Privatized London trains literally killing consumers? If the markets had been allowed to function perfectly, it wouldn’t have happened.

(Reality check, folks: governments will always have some cronyism and corruption. Legislatures always compromise. Merkets never function perfectly. If your idea can’t work around those realities, then it can’t work.

(Like communists, free-market worshipers forget that a policy that only works in perfect conditions is what most people call a "failure.")

But what makes this story interesting is that some Montanans want to reclaim the power grid for their own. Initiative 145 (generally just called "I-145"), if passed, will begin a process for buying "back Montana’s dams and establish[ing] an agency to sell power back to Montanans at the price it costs to produce it."

The power companies are taking this seriously – according to an AP report (Aug 16 2002) "Taxpayers Against I-145 has raised $439,571 and spent all but $26,527, the latest report shows. That is 21 times more money than backers of the measure have raised." In addition to that $439,571, another half-million has been spent opposing the measure by PPL Montana (a branch of a Pennsylvania company) and Avista (based in Washington), the two corporations that currently own Montana’s dams. Anyone who thinks this is a fair, democratic system probably still believes in the tooth fairy.

Despite the overwhelming money disparity, anti-privatizers could win this one, because they’re much cooler. Think "Taxpayers against I-145" (which, incredibly, doesn’t appear to have a website) is a dorky name? It’s a big improvement over the group’s original name, "Energy Producers Against Property Confiscation." (Why didn’t they just call themselves "Big Energy against Holding Big Energy Responsible," and leave it at that?) Compare that to the reformers – they’ve got some dull official name, but even the Associated Press calls them "Montanans for Dam Cheap Power." Goliath has the big wallet, but David’s got panache.

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