California Dreamin’

California recently passed a law aiming to crack down on “abuses” and “exploitation” of independent contractors and other participants in the so-called “gig economy.” (I prefer the term “side hustle” myself, but whatever.) The real target of this law are Uber, Lyft and other enterprises that offer great flexibility for people to set their own hours, etc. The new law will requite Uber drivers to be formal employees, subject to all kinds of labor regulations and mandates (and, no doubt, attempts to unionize them).

I was on the road for a quick trip last week that involved four Uber rides, so naturally I asked all four drivers what they thought of the new law. The verdict was unanimous: all four drivers hate hate hate it. One driver told me she would likely have to give it up if she was required to be a formal employee, as her regular job as an overnight counselor in a small group home for at-risk youth sometimes allowed her a good night’s sleep, and sometimes not, upon which hinged her daily decision whether to drive for a few hours.

I don’t know what the demographic profile of Uber drivers is, but my opening hypothesis is that this law will disproportionately affect minorities.

If you’re following the news you’ll know that Pacific Gas & Electric has shut off electricity again to wide areas of northern California to prevent further fire risk. One large fire raging in Sonoma County may have been started by a PG & E line, and wide-scale evacuations are under way.

I generally regard PG&E as a lying bunch of corporate socialists (partly for their cowardly decision to close down California’s last nuclear power plant while claiming they can make up for its huge output with wind and solar power, when in fact it will lock in natural gas and make emissions go up), but one reason they haven’t maintained their power lines and trimmed vegetation is that the California Public Utilities Commission refused requests for modest rate increases to pay for such maintenance.

Maybe the CPUC is worried that consumers might start to notice the high cost of California’s green dreams. Have a look at the most recent table of average electricity rates for all 50 states just out last week from the Energy Information Administration. What you’ll see is that California has the highest average electricity rates of the lower 48 states—nearly twice as high as the national average (18.64 versus 11.10 cents per kilowatt hour), and even almost twice as high as nearby Oregon and Washington.  (Hat tip: Ben Zycher.)

Keep in mind that California also now has the highest gasoline prices that is entirely the artifact of obsolete refining regulations. Gas is now around $4.50 a gallon in many places, while you can find it as low as $2.00 in some states.

I once asked Arthur Laffer how California could get away with such extreme regulatory burdens. Laffer had a clarifying answer: “That’s like asking why pretty girls are mean: Because they can.” (Art has relocated to low-tax Tennessee.) California has what economists call “exploitable asymmetries,” chiefly the climate and terrain (and wine), but the state seems determined to test the outer limits of these asymmetries.

Incidentally, as I live in a semi-remote area where power outages have been common during winter storms, I installed one of these:

Okay, Imma goin’ to exploit one of those asymmetries myself right now, and go for a run on the beach.

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