The Bleeding Hearts Dry Up 7 - Activism's Fatal Flaw

Environmentalists don't pay the costs they create.

Throughout this series, we've examined many situations where misguided activists have made matters worse, as judged solely by their own vehemently-stated goals and metrics, by promoting ideas which are supposedly intended to help fix a stated problem.

The spotted-owl saviors brought about fewer spotted owls.

The anti-pollution regulations in California led to clouds of smoke visible from space as half the state keeps going up in wildfires.

The pro-mass-transit activists in many major U.S. cities led to subway systems which are so unsafe and unreliable that ridership drops as former passengers drive or take Uber instead.

And on, and on.

Often, conservatives don't agree with the definition of the problem as stated by activists, but that's kind of missing the point: most of the time, by their own definitions, activists and their policies completely fail to fix the problem they themselves identified, at vast expense.  Generally their solution makes the problem far worse, in addition to whatever other collateral damage and costs accrue.

Yet nobody cares, and people still listen to the activists when they move on to the next "problem."

The enabling factor in the societal damage caused by environmental activism is that none of the activists are required to shoulder any of the costs of what they advocate.  Tenant-favoring activists impose rent control which steals property from landlords without compensation but doesn't cost the activists anything.  Environmental protection laws steal value from landowners, giving activists pleasant places to visit without their having to compensate the landowners.  Preservation agencies declare buildings "historical sites" which keeps owners from making changes and lets the preservationists feel good about keeping things the way they like them.

But activism has very real costs, even though the activists themselves don't pay them.  Soon after Amazon decided not to put its new headquarters in New York City, the New York Post started talking about J. P. Morgan Chase cutting employment in the city.  The Post cited "unnamed sources" to say that the bank has many job openings in other places but very few in New York.  They quoted managerial musings to the effect that without the hordes of techies Amazon was going to bring to the city, the potential employee pool wouldn't grow fast enough to meet Chase's future needs.

We speculate that New York's regulatory morass has something to do with this.  We Build Value reports that JP Morgan desires to demolish its 1960 Park Avenue headquarters:

Once the project's approvals are granted, redevelopment and construction are expected to begin in 2019 and take about five years to complete.  [emphasis in the original]

The building should grow by 5 stories and about a million square feet, but as one would expect, there are regulatory obstacles:

Under the East Midtown rezoning, JPMorgan Chase will purchase development rights from landmarks in the surrounding district in order to build the taller building. Since the owners of landmark buildings will not be making anything taller, they can sell the so-called air rights above their roofs. Part of the money they raise from the sale of these rights goes to the city for improvements to the neighborhood's public realm including shared streets, pedestrian plazas and thoroughfare.  [emphasis in the original]

To get permission to build higher, Chase has to grease the palms of owners of "landmarks" which can't build higher because their landmarks have been decreed to be untouchable by government fiat.  Some of the money for buying the right to use unoccupied air over buildings goes to the city which wrote the new zoning law.  How odd!

We've heard rumors that the going rate for the air rights plus the city's squeeze is north of a billion dollars.  Could it be that Chase has decided that the payments needed to get the right to enlarge their headquarters exceeds the value of the extra space?  Is that why they're filling jobs in other locations?

The whole air rights and "landmark building" scheme shifts costs from building owners to people who like the way these buildings look but aren't willing to pay building owners market prices to leave their buildings alone.

In California, cost shifting went into overdrive long ago.  Banks which write mortgages to build homes require homeowners' insurance so they can get their money back if the house burns down or is flooded.  No insurance company will insure a dwelling in a fire-prone Wilderness-Urban Interface where homes creep into flammable forested areas at a price any homeowner can afford.

Requiring PG&E to pay for damage due to fires caused by their equipment shifted fire liability to the PG&E customer base. This let insurance companies charge enough less for fire insurance that people could afford to build houses where they'd burn.  We see this same effect when Federal flood recovery bureaucrats demand that people restore their flooded homes in the same place, guaranteeing that they'll flood again at taxpayer expense.

Making PG&E pay for fire damage damages PG&E customers when the utility raises prices to cover fire losses or cuts power to protect itself.  Estimates of business losses due to food spoiling in idle refrigerators alone are in the hundreds of millions.

In short, making PG&E pay works only while it stays solvent and has money to pay.  The utility reported a $1.6 billion loss in the third quarter based on fires for which their responsibility is unarguable under current law.

If California mayors want to buy PG&E, how will they handle the maintenance backlog and what interest rate will they pay on the bonds they'll issue?  How will investors price California's long-term credit risk given its well-publicized underwater pension schemes and the haircuts investors took when Detroit and Puerto Rico went under?  How will investors price the statewide fire risk?

Or will anyone thinking of investing in California electricity supply require that the legislature change the law such that publicly-owned utilities cease to be liable for fires?  This would punt the problem right back onto the taxpaying homeowners - where it's in fact been all along no matter how hard the government tries to make electricity customers think someone else will pay for all their virtue signaling.

There is precedent for this sort of legislative coercion.  Back when anti-nuclear activism was at its height, the State of New Hampshire took its turn at having simultaneously the highest electricity costs in the nation and a bankrupt electric utility.  The legislature realized that voters would become really testy if they had no electricity at all.  Climate change hadn't been invented yet, so the lawmakers knew that cynical New Hampshire voters would know exactly where to place the blame.

They had the wisdom to realize that simply taking over the utility wouldn't work well, so they sought outside investment.  The investors insisted that the legislature write laws guaranteeing a series of annual 3% increases in electric rates which would run for 7 years.  As in California decades later, a legislature consented to the only reasonable fix to an electric problem, and all it cost was money - someone else's, of course.

In that case, there wasn't much of a maintenance backlog; the utility had gone under due to the escalating costs of a carbon-free nuclear electric plant.  Most of the extra costs were due to activists sitting in, filing lawsuits, blocking roads, and engaging in other costly and utterly unproductive shenanigans.

Enough voters blamed the government for letting them run up costs so much that the lawmakers felt that they had to find a fix, but no activist accepted one iota of blame for bankrupting the utility on which their neighbors depended.  Once again, the cost went somewhere, anywhere... except onto the activists that brought it about in the first place.

Where Are We Going?

We've pointed out that societies collapse when government costs more than the society can afford.  Eco-madness has forced PG&E to sign high-priced contracts to persuade investors to build "renewable" energy sources to fulfill Governor Moonbeam's 2011 law.  California electricity costs about three times as much as in most of the country, gasoline requires a special blend which makes it cost close to twice as much as the national average, jammed freeways impose horrendous commuting costs, and on and on.

Land use restrictions mean that so few houses can be built that most Californians pay a much higher percentage of their incomes for housing than in other parts of the nation.  Families earning six figures are "low income" in many parts of the state.  It's no surprise that California is overrun by an epidemic of homelessness that hasn't been seen since the Okies of the Dust Bowl a century ago.

As Dr. Thomas Sowell put it:

Activism is a way for useless people to feel important, even if the consequences of their activism are counterproductive for those they claim to be helping and damaging to the fabric of society as a whole.

We're left with the conclusion that California's costly mismanagement of their environment and ridiculously high taxes coupled with government-enforced penny-pinching by their electric utility has led to the highest electric prices in the US, a bankrupt utility, and a great many very unhappy customers, some of whom vote... but it doesn't seem to matter.

Do California voters know whom to blame?  If they don't, how will blaming a bankrupt utility help anyone?  Who is, or should be, responsible for telling them - assuming they'd even listen?

Have their bleeding hearts bled out yet?   The Third Worlders who've strolled across the border won't mind because even in its second-world state, California is more pleasant than the nations they left.  They'll continue to vote for Democrats, open borders, and more handouts.

Meanwhile, the productive folks who actually pay for everything continue to leave, save for the plutocrats who believe they own enough politicians and have built strong enough walls around their gated communities to protect themselves.

One wonders how long the other voters of California will tolerate increasingly third world conditions.  Is California heading for an anti-woke revolution?  Or just an overall collapse?

Remember, not too many decades ago, Detroit was the richest city in the world and Silicon Valley was farmland.

Will Offensicht is a staff writer for and an internationally published author by a different name.  Read other articles by Will Offensicht or other articles on Environment.
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