by Mitch Kokai
Senior Political Analyst, John Locke Foundation
[A]ll those high winds and overturned trees produce a second, often more serious, and often more enduring problem: the loss of electrical power.
To prevent that, a small army of linemen, tree-trimmers, and crisis personnel were dispatched to the storm zone from Texas, Mississippi, and even farther away. This was not organized by FEMA or by any government agency, but by the private, voluntary efforts of investor-owned utility companies around the country. …
… A good utility company is like a good government agency: You don’t ever have to think about it very much. Electric companies’ No. 1 concern is seamlessness and effective invisibility: You flip the switch and the lights come on, no questions asked. Their worst nightmare is having customers start thinking about them too much. No good can come of that, is the general consensus inside utility-company boardrooms.
For that reason, they have for several decades organized mutual-aid agreements through their trade associations, the most significant of which is the Edison Electric Institute, which represents all investor-owned electric utilities in the United States, providing power to some 220 million Americans. It represents 70 overseas firms as well and a great many subsidiary concerns, such as suppliers of electrical equipment and providers of related engineering services. It has been operating since Franklin Roosevelt was in his first term.
In theory, this kind of cooperation should not exist. If every utility executive were in fact a rational specimen of Homo economicus, he would gleefully greet hurricanes that put his competitors at a disadvantage and imposed large losses on them. (Utilities may not often compete directly with one another for customers, but they do compete for capital.) The difference of a few tenths of a percentage point in the dividend could be the difference between a large institutional investor putting its money into Jones Power instead of Smith Power, with billions of dollars potentially at stake. And, yet, Jones Power does not revel in Smith Power’s troubles — instead, it sends its own workers into Smith’s market to help out Smith’s customers.
No doubt you could construct a plausible economic narrative in which this can all be explained in terms of each firm seeking to secure its own self-interest very broadly defined — utilities maximizing utility.
But that misses the point.
For both its admirers and its detractors, the critical feature of capitalism is its competitiveness. For the admirers of capitalism, that is what makes it efficient, ensuring that the interests of large and powerful firms must in the end be roughly aligned with the interests of ordinary consumers, who in the aggregate have much, much more power than any individual company. Thus the economic might of Nike and Walmart and the innovative genius of Apple are bent in the interest of ordinary people, even poor people, who in spite of their limited means have the ability to choose Reebok or Target or Samsung instead. …
… What is truly remarkable about 21st-century capitalism is not the competition — creatures that aren’t even quite sentient, like catfish, snails, and members of Congress, compete over scarce resources, too — but its cooperation. Every time you buy a T-shirt or a fast-food hamburger, you tap into a vast network of productive resources involving everything from agriculture to information science to logistics, millions of people who do not know one other — who, if they did, might even hate each other — cooperating in relationships of literally incalculable complexity, in the service of ordinary schmucks like us.