Discussion: (0 comments)
There are no comments available.
View related content: Politics and Public Opinion
Light bulb by Shutterstock.com
Say goodbye to the regular light bulb this New Year.
For more than a century, the traditional incandescent bulb was the symbol of American innovation. Starting Jan. 1, the famous bulb is illegal to manufacture in the U.S., and it has become a fitting symbol for the collusion of big business and big government.
The 2007 Energy Bill, a stew of regulations and subsidies, set mandatory efficiency standards for most light bulbs. Any bulbs that couldn’t produce a given brightness at the specified energy input would be illegal. That meant the 25-cent bulbs most Americans used in nearly every socket of their home would be outlawed.
People often assume green regulations like this represent the triumph of environmental activists trying to save the plant. That’s rarely the case, and it wasn’t here. Light bulb manufacturers whole-heartedly supported the efficiency standards. General Electric, Sylvania and Philips — the three companies that dominated the bulb industry — all backed the 2007 rule, while opposing proposals to explicitly outlaw incandescent technology (thus leaving the door open for high-efficiency incandescents).
This wasn’t a case of an industry getting on board with an inevitable regulation in order to tweak it. The lighting industry was the main reason the legislation was moving. As the New York Times reported in 2011, “Philips formed a coalition with environmental groups including the Natural Resources Defense Council to push for higher standards.”
Industry support for the regulations struck lawmakers and journalists as a ringing endorsement of the regulations. Republican Congressmen Fred Upton, who has since flip-flopped and attacked the regulations, cosponsored the light bulb provision in 2007. His excuse, according to conservatives I spoke to: It couldn’t be that bad if the industry supported it.
Liberals used this very argument to ridicule Republicans’ 2011 efforts to repeal the law. Democratic congressman Steny Hoyer defended the rule by saying, “The standards are supported by the lightbulb industry.”
Joe Romm at the Center for American Progress pinned repeal efforts on the “extremist Tea Party wing of the party, which opposes all government standards, even ones that the lightbulb industry itself wants.”
That “even” signifies that the industry’s support indicates consensus. Instead, it signifies how consumers lose.
Competitive markets with low costs of entry have a characteristic that consumers love and businesses lament: very low profit margins. GE, Philips and Sylvania dominated the U.S. market in incandescents, but they couldn’t convert that dominance into price hikes. Because of light bulb’s low material and manufacturing costs, any big climb in prices would have invited new competitors to undercut the giants — and that new competitor would probably have won a distribution deal with Wal-Mart.
So, simply the threat of competition kept profit margins low on the traditional light bulb — that’s the magic of capitalism. GE and Sylvania searched for higher profits by improving the bulb — think of the GE Soft White bulb. These companies, with their giant research budgets, made advances with halogen, LED and fluorescent technologies, and even high-efficiency incandescents. They sold these bulbs at a much higher prices — but they couldn’t get many customers to buy them for those high prices. That’s the hard part about capitalism — consumers, not manufacturers, get to demand what something is worth.
Capitalism ruining their party, the bulb-makers turned to government. Philips teamed up with NRDC. GE leaned on its huge lobbying army — the largest in the nation — and soon they were able to ban the low-profit-margin bulbs.
The high-tech, high-cost, high-margin bulbs have advantages: They live longer and use much less electricity. In the long run, this can save people money. But depending on your circumstances, these gains might be mitigated or eradicated.
The current replacement for traditional bulbs are compact fluorescents (those curly bulbs). They give off UV rays, contain mercury gas, take a while to get bright and don’t last any longer than regular bulbs if you flip them on and off a lot.
Newer technologies, like LED bulbs, are better than CFLs, and they supposedly last 20 years. But they cost even more. In your office building, they probably make sense. In your house? Well they won’t last two decades in a house full of kids who wrestle with the dog and throw footballs around the living room (maybe Congress should ban domestic wrestling and passing).
There is a middle ground between everyone using traditional bulbs and traditional bulbs being illegal. It’s called free choice: Let people choose if they want more efficient and expensive bulbs. Maybe they’ll chose LEDs for some purposes and cheap bulbs for others.
But consumer choice is no good either for nanny-staters or companies seeking high profit margins.
Technologies often run the course from breakthrough innovation to obsolete. Think of the 8-track, the Model T or Kodachrome film. But the market didn’t kill the traditional light bulb. Government did it, at the request of big business.
There are no comments available.
1150 17th Street, N.W. Washington, D.C. 20036
© 2015 American Enterprise Institute for Public Policy Research