Free Us from the Free Market

If anything good were to come out of the economic destruction wrought upon us, it should be the death of the free-market myth that propelled decades of policymaking. After the crash, even Alan Greenspan had to admit there was a “flaw in the model … that defines how the world works.”

In Texas, that model remains in place. Texas lawmakers have been on a deregulation binge for decades, and Texans pay some of the highest rates in the country for electricity and home insurance. Around 75 percent of Texans live in areas where consumers have the glorious freedom to choose among several electricity providers. They pay about twice as much as the other 25 percent of Texans, who get their power from city-owned utilities, electric co-ops, or regulated investor-owned companies. That’s because the current system allows energy generators to charge expensive natural gas rates even if they are burning cheap coal. This year, the Public Utility Commission will go through its regular “sunset” review. The review gives legislators a chance to fix the wholesale market and force power companies to charge only what it costs to produce electricity, plus a reasonable profit.

Texans pay double the national average for home insurance, more than people in any other state except Florida. It’s no coincidence that the head of the Texas Department of Insurance has much less power than regulators in other states to do anything about it. In Texas, insurers can raise rates or change coverage without prior approval from the commissioner. The commissioner can sue companies over rates it deems unfair, but the state often is outgunned by corporate lawyers who can drag lawsuits on for years. Legislators could offer a simple fix: They could force insurers to get prior approval before raising rates, which would make companies justify raising rates while reaping enormous profits and cutting back coverage.

Regulation is a bread-and-butter issue, and Texas voters are looking for something to chew on. They’re justifiably angry that friends and family have lost jobs while bailed-out bankers are getting bonuses. The solution offered by Republicans and their Tea Party allies—shrinking government even further—almost surely would make the problems worse.

It’s a sad state of affairs, but one that provides an opportunity. The candidates who survived the March 2 primaries (which will have occurred after this issue goes to press) need to cut through the haze of free-market rhetoric, take a risk on some old-school populism, and offer Texans a new deal. This time, let’s make sure it’s not corporations getting the deal.