Drawing The Line Against Misconduct: Theodore "Teddy" Roosevelt (1858-1919) twenty-sixth President of the USA and champion of the progressive regulation of America's over-mighty corporations and their "robber baron" proprietors. The Labour-Green plan for regulating the New Zealand energy market falls squarely within the Rooseveltian tradition.
IN ITS BROADEST SENSE, socialism is about putting society’s
needs ahead of the market’s choices. Indeed, socialism comes into being only
when it makes more sense to be a voter than a customer: a citizen than a
consumer. In this sense, at least, the Chief Executive of Mighty River Power,
Doug Heffernan, is right: the Labour-Green policy package, Energising New Zealand, is “a socialist consumer model”.
But, the economic commentator, Bernard Hickey, is also right
when he says:
“In the world of corporate and government relations there’s
a vague concept referred to as a ‘licence to operate’. It means that large
companies or departments know there’s only so far you can push the public and
politicians before they react by, in effect, removing that licence to operate
and regulating profits lower.”
That point has been reached many times before in history,
and the result has always been the same: the large companies and departments
lose.
The period of American history spanning 1890 to 1910 was
known as the “Gilded Age”. The fruits of America’s break-neck industrialisation
had been captured by an infinitesimally small percentage of the population.
These “robber barons”, as they came to be called, flaunted their unprecedented
wealth by constructing mansions and castles modelled on those of the European
aristocracy. Names like Vanderbilt, Rockefeller, Morgan and Carnegie became
synonymous not only with great fortunes, but with great power.
Too much power.
Curbing the power of the robber barons of the Gilded Age was
the mission of the US political movement known as “Progressivism”. It’s most
effective advocate was President Theodore Roosevelt. His summation of the
Progressive Movement’s attitude to the great American corporations provides a
useful, and eloquent, definition of the licence of operate:
“Our aim is not to do away with corporations; on the
contrary, these big aggregations are an inevitable development of modern
industrialism, and the effort to destroy them would be futile unless
accomplished in ways that would work the utmost mischief to the entire body
politic. We can do nothing of good in the way of regulating and supervising
these corporations until we fix clearly in our minds that we are not attacking
the corporations, but endeavouring to do away with any evil in them. We are not
hostile to them; we are merely determined that they shall be so handled as to
subserve the public good. We draw the line against misconduct, not against
wealth.”
“[S]o handled as to subserve the public good.” It’s a line
Labour and the Greens would do well to borrow and develop. Because the opposite
of “subserve” is “subvert” – and to demonstrate the meaning of subversion in
relation to electricity pricing, they need only describe what happened in California
when its energy needs were left to the tender mercies of an over-mighty US
corporation called Enron.
Enron was revealed to be a corporation in which “misconduct”
bordering on “evil” was the surest route to promotion and profit. Inevitably,
the people of the United States (and of California especially) “drew the line”
and Enron’s licence to operate was withdrawn.
The system of electricity pricing operating in California
today is strikingly similar to the system being proposed by Labour and the Greens.
There’s
a very good reason for emulating the Californians. Our energy companies may not
be as red in tooth and claw as Enron, but the quantum of “super-profits” which
they have extracted from the long-suffering New Zealand consumer is truly
staggering.
Research
undertaken for the NZ Commerce Commission by American energy expert, Professor
Frank Wolak, and published in 2009, concluded that “over a period of some six
and a half years the generators have exercised their substantial market power
to earn market rents estimated conservatively to be $4.3 billion.”
As
trade union leader, Matt McCarten, put it: “That’s $1000 profit for
every man, woman and child.”
Clearly,
New Zealanders have lost themselves a great deal of money by submitting
docilely to the roles of consumer and customer. Voices crying in the wilderness
– most particularly those belonging to long-time energy campaigners Molly
Mellish and Geoff Bertram – have been telling us for years to wake up and
realise how much it’s been costing us to smell the coffee.
To
the undoubted relief of Molly and Geoff, Labour and Green policy-makers have
finally begun to listen and now we, the consumers and customers of wildly
over-priced electricity, are being invited to put aside those passive identities
and become, instead, active citizens and voters.
In
2014 the Opposition parties have invited the New Zealand electorate to revoke
Mighty River Power’s, Genesis Energy’s, Meridian Energy’s and Contact Energy’s
licence to operate as unfettered super-profiteers. As citizens and voters we’ll
finally be empowered to follow Teddy Roosevelt’s advice: drawing a line against
our energy generators’ social misconduct and subserving them to the public
good.
This essay was originally published in The
Press of Tuesday, 23 April 2013.
