Power cuts in California hold a green message

It has come to something when the lights go out in California, the richest and most populous state of the richest nation in the world. It is, at least, a useful corrective to the idea that the American economy is a model of free-market capitalism.

It has come to something when the lights go out in California, the richest and most populous state of the richest nation in the world. It is, at least, a useful corrective to the idea that the American economy is a model of free-market capitalism.

As ever, though, California leads the way for the rest of the world. It is not so much that what happens there will inevitably occur over here in a few years' time, like flower power, Apple Macs and tax cuts. Indeed, one of the causes of the blackouts in San Francisco was a botched attempt to introduce competition into a monopolistic energy market - something that we managed rather better here.

California's power cuts hold a lesson for all of us, however, in that they are a monument to misguided environmentalism. The mistake the state made was to discourage investment in new power stations on environmental grounds, while preventing energy companies putting up the price of electricity. As a result, demand for electricity has continued to grow, driven by the state's rising population, its rising prosperity - which increases the demand for air-conditioning among other things - and the fact that the hardware of the internet revolution, much of it based in Silicon Valley, is unexpectedly power-hungry. Another "green" measure gives tax incentives to electric-powered cars. This reduces local pollution, but, given the wastefulness of electricity generation, transmission and battery-charging, uses a lot of electricity and burns up more fossil fuel than the internal combustion engine.

The state of emergency in California is a striking illustration of the dangers of perverse incentives, and the difficulty in prosperous democracies of using taxes to raise the price of energy. But these are issues that we - and the rest of the world - need to tackle before we arrive at Californian levels of prosperity and Californian levels of the use of electric gadgets.

If the power cuts force Californians to realise that using less electricity is the best way to preserve their environment, and that using less energy altogether is essential to mitigate global climate change, some good may come of them. Unfortunately, it seems more likely they will opt for a technological fix, and raise electricity prices just enough to finance the building of more power stations.

Even in California, home of the Sierra Club, it seems that environmentalism is only skin deep.