Friday, February 6, 2009

Banning Utility Shut Offs Allows Stealing

Recently it has been reported that a man in Michigan froze to death in his home; he had over $1000 in unpaid bills and to remedy the problem the problem the electric company installed a limiter that turns the thermostat down according to how great the unpaid amount is. It has been proposed (and enacted, if I heard correctly) that the electric company not be allowed to cut off power during the winter months, and in some areas this is already a law. What I am going to demonstrate is that this "solution" is both immoral and impractical, and that the electric company had a right to limit or cut off the Michigan man's power. Let us first focus on the practical side by applying the lessons we have learned from The Consequences of Not Facing Consequences.

Let us assume that in an area there is a law that prohibits electric companies from cutting off anybody's power during the winter months, regardless of reasons. What happens then is that the consequence of not paying one's power bills is seemingly removed; if you pay your bill then you may continue to consume electricity, and if you do not pay your bill you may still continue to consume electricity. The incentive to pay one's power bills is now removed, or at the very least reduced. Some people may start to use the money they would use for the bill for a rainy day fund instead, only paying when absolutely necessary. Others may be more irresponsible and use their money for unnecessary things or never intend to pay their bill, which is outright theft. How does this affect the electric company?

Now the electric company is in trouble! Their costumers are consuming their resources but they are not getting enough profits to either improve their resources or even so much as replenish them. If the problem is small scale and not so many people are ignoring their bill, then that means that price rates will increase for everyone and the responsible people who do pay their bills will be punished. If the problem is large scale and very many people are not paying their bill, then the company could go into total bankruptcy and then everyone using electricity from them will lose power and possibly freeze to death. A body that has no subsistence cannot hold life (in this case, a business without money cannot stay in business). But the latter scenario is worst-case and very unlikely. Before the company went bankrupt the government would step in again and either nationalize the company, which would put ignorant bureaucrats in charge of a specialized business, or would try to forcibly make its resources cheaper, which only spreads the scarcity and bankruptcy. In the case of the nationalization, the electric bills one thought one could get away with not paying are now being paid with one’s tax dollars; only now power may be rationed (limiters for everyone) or more prone to outages. In the former scenario where prices are merely increased, one could also run into the same problems. People have a tendency to regard a lower price that existed in the past as the more “normal” price than a higher one, even though prices are contextual, so a person may be upset that his bill went up “unfairly” and then demand that the government push prices down to more “acceptable” rates. Again the company curtails bankruptcy by not having capital and again the government steps in to nationalize the company or make its resources cheaper. Rarely ever does the government blame its policies for the problems, because for that the politicians would have to openly admit fault, so thus we get ourselves in a vicious circle of government intervention, failure, more government intervention, more failure.

As you can see, the government’s attempt to prevent anyone from freezing to death could very well leave *everyone* frozen to death, or at least a reduced quality of life. But not only is the proposed solution impractical, but also morally wrong.

Life is what makes the pursuit of values possible, so life must be the standard of value, i.e. of morality, to refer to when choosing values if life is what one wishes to keep. Whatever benefits life and makes one live longer is a moral good; whatever harms life and makes one live less is an anti-value. In a civilized society, one sustains one’s life by production and trade, which requires the use of money. When the government prohibits the electric company from cutting off power it is allowing for people to steal its resources, thus violating it property rights in two ways. The company takes monetary losses and the people employed there are less able to survive. In our worst-case scenario where the company goes bankrupt, the employees cannot buy their groceries and the electricity consumers cannot have their heat; both have lost. To protect the survival of one party the government has compromised the survival of both.

To bring back the focus on the news story presented, the electric company had full moral right to limit that man’s power consumption. Without paying his bill the man was not morally obtaining his power, and to prohibit the cutting off of power is to advocate stealing. Stealing, we know, is not healthy for anyone, even if one needs the object.

If we want to prevent another person from freezing to death we must learn to respect property rights and to let people face the consequences of their actions and decisions.


On a related note, Kendall Justiniano has started a new blog that specializes in the discussion of economics and economics as related to current events. I recommend it, for so many blogs only brush by on economic principles and do not fully explain themselves, leaving its readers unsatisfied.

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