Category: economics

There is a New York Times story that talks about how some Texas utility consumers faced 5 digit bills during the recent storm. They are painting the utility as being greedy, and the state government as inept, because of the steep rise in costs.

Of course, I have a different opinion. The culprit here is consumers and their lack of understanding of fundamental economics. Texas has a largely unregulated, pure supply and demand system. One provider, Gridly, charges consumers a flat $9.99 monthly fee and allows consumers to pay the wholesale rate for electricity. This results in cheap electric bills in normal times.

During abnormal times, like a blizzard or hurricane, wholesale prices skyrocket as utility providers shutdown because of the disaster and what power is left comes at higher prices due to its scarcity. That is supply and demand at work. Gridly even warned its customers that the prices were going to increase, and advised them to switch to another provider.

Many didn’t, for whatever reason. The power for them stayed on, but at prices that were up to 100 times more than normal. They claim that they could see the bill climbing, but could do nothing about it. Bullshit.

Turn off the breakers.

You ALWAYS have choices. You were told to switch providers, and you didn’t. You knew the prices were climbing, and knew you could turn off the power, but you didn’t.

Instead, you complain about “price gouging” AFTER the fact, and demand that mommy and daddy government come bail you out of the results of your own bad choices. Everyone warned you, and you ignored the warnings.

So now the government will likely pass laws preventing this from happening again. All this means is that companies like Gridly who were able to keep the lights on during a disaster, thus giving people an option (admittedly a higher priced option), will not be there next time.

Here is an article from CNBC that is an attempt to make the reader feel sorry for people who made bad choices. The article focuses on how people with large student loan balances should have the loans forgiven.

The story starts by introducing us to Sanders Fabares. Here is what the article had to say:

Even after years of paying $1,000 a month toward his student loans and his wife’s, their balance hadn’t decreased by much. They still owed around $80,000, down from the $90,000 they’d originally borrowed.

“I started trying to understand what we were doing wrong,” Fabares, 41, said.

His research quickly moved away from his own loan statements and to the larger student debt system. The Lakeside, California, resident read about the millions of borrowers in default, and how many people’s monthly payments were only going to the interest on their debt, meaning their balances weren’t dropping either.

At $1,000 a month, I knew that the loan had to be quite large. I took out a $12,000 student loan for my Master’s degree, and the payment was less than $100 a month. So I decided to do some digging. Here is what I found (pdf alert).

It turns out that he and his wife attended a private arts college and were taking classes in photography and drawing. They racked up $96,000 in debt before graduating in 2006. After 13 years of paying the minimum payments, they had paid down a third of their debt before deciding to quit.

In other words, he chose an expensive education in a field that doesn’t pay enough to cover the cost of his degree, and didn’t know how loans and compound interest work. His solution to this was to join a group that refuses to pay their loans while demanding that the Government do so.

After quotes from one of the communist founders of “The Debt Collective,” the CNBC article moves on to the story of Jenny Lezan, who ended up attending Benedictine University and the Art Institute of Illinois. There, she racked up $170,000 earning a degree in art, so she could secure a job paying $28,000 a year. Here is a link to her freelancing webpage. She blames her bad luck on racism and sexism:

A well-paying job has been hard to find. Last year, working as an adjunct professor and freelancer, she made $28,000. “Being Hispanic and a woman, I’m up against additional obstacles,” she said.

Sorry, but a $170k degree in a field that only pays $28k a year is just a bad choice. You should have either not gone to school, or picked a major where you can actually make money. You could make a little extra if you did some Internet porn for onlyFans, maybe.

Then the CNBC article moves on to Rebekah Valorn, a woman from Salem, Oregon who ran up over $200,000 in student loans getting a law degree. A law degree is certainly a great choice of major, so what happened? Her mother got sick, and Rebekah never took the Bar exam. She was working for the state of Nevada, where she was making about $19,000 a year, when she declared Chapter 7 Bankruptcy in 2019. Why Bankruptcy? To get rid of her $20,000 or more in credit card debt, but still owes on her student loans. Sad story, but I don’t see how that is anyone’s fault but your own.

My Dad died while I was in college. I made due. Life happens. That doesn’t make it anyone else’s fault. Who does she blame for this? The school:

“It’s been transformative being in this group and knowing we don’t have anything to be ashamed of,” Valorn said. “An education shouldn’t cost a quarter of a million dollars.”

You took out a loan for an education that would pay you millions of dollars. It was a great choice. The only problem was that the bet you made was in a person with no follow through, a person who couldn’t overcome adversity and just gave up when things got challenging, so you lost the bet.

That doesn’t make it society’s fault, nor should that mean that the rest of us should pay for it.

We are printing money as fast as we can, which considering that most money isn’t printed, it’s created by computers, is pretty fast.

Trump increased the National Debt by 141% from $19.6 to $27.7 trillion in four years.

President Obama increased the debt by 185%- to $19.57 Trillion.

President George W Bush borrowed $5 trillion in 8 years, increasing the national debt by 187%.

It took President Clinton 3 and a half years to borrow his first trillion dollars. All told, he borrowed $1.2 trillion in his first term, and $600 billion in his second. He increased the national debt by 140% in eight years.

George HW Bush borrowed his first trillion in 3 years, and he increased the National debt by 170% in four years.

Reagan borrowed his first trillion in 6 years, and doubled the National debt during his eight years in the White House.

Carter increased the National debt by 150%, but “only” borrowed $300 billion in 4 years. I guess that was when $1 Billion was real money.

Ford increased the debt by 147% in 3 years., Nixon by 135% in 5 years, Johnson by 116% in 6 years, Kennedy by 106% in 2 years, Eisenhower by 108% in eight years.

Note that we weren’t really allowed to increase the debt until we divorced from the gold standard during the Nixon administration. Ever since then, spend, spend, spend.