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February 23, 2021 | Welcome To The Third World, Part 32: Texas, Really??

John Rubino is a former Wall Street financial analyst and author or co-author of five books, including The Money Bubble: What To Do Before It Pops and Clean Money: Picking Winners in the Green-Tech Boom. He founded the popular financial website in 2004 and sold it in 2022.

California and Texas were, until very recently, the two best US states. The former is the richest and highest-profile, and home to Silicon Valley and Hollywood, while the latter is both huge and the place to which millions of Californians want to move.

It’s not an exaggeration to say that as these two go, so goes the country. Which is why the past few years have been such a blow to America’s “leader of the free world” self-image.

First, California fell into a fiery abyss where its ludicrous car-centric, stupidity-tolerant culture was exposed as an epic mistake. See Welcome To The Third World, Part 30: California Burning In The Dark.  Also this and this. 

California’s crash-and-burn left Texas as the model of governance that would guide us back to something resembling a “right track,” with business-friendly taxes and regulations, restrained public sector pensions, and expansive personal freedoms.

And then a little bit of snow broke the Lone Star state. By now everyone has seen the news reports of thirsty Texans unable to heat their homes or access their bitcoin wallets. And you’ve probably read about how close the electric grid came to a total melt-down that would have left millions without power for months. See Texas power grid was ‘seconds or minutes’ from catastrophic collapse, official says.

There’s an ongoing debate about whether the culprit was too many windmills or some kind of arcane networking flaw that apparently made a cascade failure frighteningly easy to achieve. The only thing that’s verifiably true at this point is that northern states made it through a much tougher winter more-or-less unscathed, with wind turbines apparently still turning and power still flowing. So it’s likely that Texas’ plight has less to do with technology than with bad planning. They just screwed up their power grid, plain and simple.

This is serious, because (at least according to US conventional wisdom) what sets us apart from the typical banana republic is competence and discipline. We don’t screw up our finances and crash our currency. Our elections are clean and smooth. And our big systems – banking, power, transport, law enforcement – operate efficiently and honestly, giving citizens a predictably good quality of life at a reasonable cost.

But nothing in the previous paragraph has been true for at least a decade. We’re borrowing insane amounts of money with no end in sight. The past two presidential elections were chaotic and (according to the losing side) corrupt. The formerly coolest state is such a mess that its governor is in danger of recall. And now the crown prince in the best-state monarchy can’t manage its way through a winter storm.

The only people enjoying this spectacle are the Illinois politicians whose criminal mismanagement now looks decidedly average. And maybe the leaders of actual banana republics whose citizens are suddenly glad they don’t live in Texas or California. Buy gold.

The other posts in this series are here.

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February 23rd, 2021

Posted In: John Rubino Substack

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