14 December 2011

Whence Regulation: Light Bulbs

I thought I covered this in an earlier post, but apparently I’ve only ever written about this in an academic paper:

The use of efficiency mandates to snuff out the standard light bulb was an exercise of unadulterated crony capitalism. It came about after big bulb manufacturers, frustrated by their customers’ refusal to switch from cheap throwaway incandescents to the far more profitable compact fluorescents touted by greens, decided to play hardball.
“So some years ago,’’ The New York Times Magazine noted last month, “Philips [Electronics] formed a coalition with environmental groups, including the Natural Resources Defense Council, to push for higher standards. ‘We felt that we needed to … show that the best-known lighting technology, the incandescent light bulb, is at the end of its lifetime,’ says Harry Verhaar, the company’s head of strategic sustainability initiatives.’’
Other corporations joined the plot, lobbying Congress to croak a product Americans overwhelmingly like and compel them to buy the more expensive substitute the industry was eager to sell them. The entire scheme, a lobbyist for the National Electrical Manufacturers Association testified candidly in 2007, was “at the industry’s initiative.’’ Unable to convince consumers to voluntarily abandon Edison’s light bulb, Big Business got the government to force the issue. “Of such deals,’’ remarks Bloomberg columnist Virginia Postrel, “are Tea Parties born.’’

Big Business and Big Government go hand in hand.  They just do.  They are natural complements.

The owners and managers of large businesses would generally rather use the government to attain market advantages than compete in an open market.  Having to constantly scramble in response to one’s competition to appease the merciless, incessant demands of consumers is a difficult, often thankless task.  And one day’s success is no guarantee of the next day’s success.  So why play fairly when it’s easier to cheat?

And this is exactly what happened with incandescent light bulbs.  Light bulb manufacturers threw their hats in with environmentalists because it was more profitable to do so, seeing as how CFLs have fatter margins.  And why try to please consumers when you can get the government to bully them?  For their own good, of course.

It is interesting to note how light bulb manufacturers happened just so happened to see the merits of CFLs.  Not only are they more profitable than incandescents, but they’re good for the environment too!  What a happy coincidence.

At any rate, this story at least shows, once again, that some regulation exists at the behest of the regulated because compliance is profitable.  As such, one should never ever trust regulation supported by businesses as it tends to be even more anti-market than that which most statists could ever dream up.

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