The lead, front-page story in today's New York Times reports that "In California, where record electricity prices and local blackouts captured national attention for months, wholesale power prices have fallen to the lowest levels in more than a year. Analysts credit new power supplies, a state-led conservation effort and federal price controls for averting what many had feared would be a catastrophic summer of scarcity."
Wow. How about that. Federal price controls have averted "what many had feared would be a catastrophic summer of scarcity." Given how this defies the standard rules of economics, it sure seems worthy of front-page play -- if it's true.
But that's a big "if." Especially if you remember a July 4, 2001, article that ran in the New York Times national section under the headline, "U.S. Price Controls Are Said To Worsen Power Shortage." That article reported: "state and utility officials said the federal price restraints, put in place on June 19 after months of vigorous debate, seemed to have had the perverse effect of reducing supplies when they were most needed."
The two articles contradict each other. Today's says the price controls averted scarcity; the July 4 one said the price controls reduced supplies. If the Times news department is going to do such a full reversal on the matter of price controls, it would be nice if it offered readers an explanation. If the reversal is not merely a matter of the beliefs of the Times news department but in fact reflects some independent reality in the world outside the Times newsroom, it would be nice to have an explanation of that, too. How can the same policy that on July 4 was reducing supplies have the effect on July 16 of averting scarcity?