Why Government Regulation Doesn't Work

The problem with government planning and problem solving is that the planned solution tends to be linear in the sense that here is the problem and here is the solution. Once put in motion, the solution tends to be rigid and not allow for flexibility as conditions change. If the world were static, it would be relatively easy to spot a problem, design a solution and then solve the problem by replacing the source of the problem with the solution. Thus, if energy is scarce and energy consumption is rising, then mandating that people replace a simple thing like an incandescent light bulbs with Compact Fluorescent Light bulbs (CFLs for short) which give about the same amount of light per bulb but use 70% less energy is an ideal solution. With light bulbs producing light for the 301+ million people in the U.S. the energy savings can be significant (even though electricity is what is being saved, much of the electricity is produced using oil so this will ultimately reduce oil consumption).

However, the world is not static but dynamic which means that when this change is implemented other things will not remain unchanged with the result that there will be many unintended consequences which will not only force the government to dictate solutions to the new problems, but will also negate some or all of the benefits that the mandated solution to the original problem was supposed to provide.

Let's take a look at some of the problems that will result if Congress goes ahead and attempts to help solve our so called energy crisis by mandating that, beginning in 2014, CFL bulbs replace traditional incandescent light bulbs which consume 70% more electricity than the CFL bulbs.

The first big problem here is the environmental problem resulting from the use of mercury in the CFL bulbs. Congressman Poe in the video at the right discusses this at great length. An unintended consequence of mass use of CFL bulbs is a build up of mercury as discarded bulbs end up in landfills. While unintended, this particular problem is not exactly unexpected. However, with oil prices rapidly rising and consumers (read voters) screaming for relief from $4 plus per gallon gasoline prices, the problem at hand is the current energy situation and not the future environmental problem that can be expected to occur as a result of the mandated switch to CFL bulbs. Further, the anticipated environmental problem will not occur in 2014 when the mandate will take effect, as it will take time for discarded bulbs to build up in landfills (and the life of these bulbs is 2 - 3 years or more) to the point where mercury levels become a problem. Every member of the House and Senate today (June 2008) will face one or more re-election campaigns between now and 2014 when the law takes effect and more elections before the environmental impact moves from being an anticipated side effect to a crisis itself. The bottom line for the career politicians in Congress is to appear to be solving current problems in anticipation of the next election not waste time worrying about expected problems and elections decades in the future.

The second big problem is that, even if members of Congress and the rest of the government were the all knowing public servants devoid of any personal ambitions or desire for pecuniary gain, as liberal mythology portrays them, it would still be impossible to craft a solution to any problem that would anticipate every possible negative impact let alone avoid all of them. The communists in the old Soviet Union tried this type of economic micro-management and, in less than a century, they managed to take from a rapidly rising industrial economy at the start of the 20th century and drive it down to third world economic status before the end of that century.

While the environmental "crisis" that will emerge in time from the mandated switch to CFL bulbs won't be an immediate problem, disposal of the bulbs will be a problem almost from the start. As Congressman Poe warns, the EPA already has guidelines in place for clean up when these bulbs break. When they break in a public place either laws and regulations are or will be in place from various levels of government mandating cleanup procedures or the organization's legal department, fearing lawsuits, will have similar regulations in place dictating how the clean up should be done. A few years ago, while working as a volunteer lunchroom aide at my children's grade school, I witnessed a "mercury spill" incident when a bracelet containing a tiny amount of mercury (these were popular at that time) that was worn by one of the girls broke causing the mercury to spill on the floor. While the spill area was less than one square foot, we had to immediately move the children out of the area and cordon off an entire quarter of the lunch room. We then had to call the fire department which immediately dispatched two large fire trucks and almost a dozen firemen. However, the only purpose of the firemen was to guard the area (we were merely parent volunteers so professional emergency responders were needed to make sure our children did not risk exposure by entering the "contaminated" area). Finally, another heavy truck arrived with three men, looking like astronauts in their head to toe hazardous materials outfits, whoswept up and properly disposed of the spill (when I was a child we had thermometers, containing 2 - 3 times as much mercury as the bracelet contained, which my parents used to take our temperature when we were sick and when one was occasionally dropped and broke, my father would simply sweep it up and throw it in the trash). Of course the trucks used of the fire department burn gasoline at a rate that makes the biggest SUVs appear to be fuel efficient so part of the energy savings from the CFL bulbs will be consumed by fire departments and other first responders cleaning up "mercury spills" when these bulbs break.

Congressman Poe also made a point of the fact that these bulbs should be taken to a recycling center rather than thrown in the trash when they burn out. However, part of the appeal of these bulbs is their very long life which means that for households burned out bulbs will more than likely be a one at a time occasional thing. Of course when using bulbs that can last up to 3 years or more, most people will not keep the packing until the bulb burns out so that they can read the disposal instructions. Thus, the bulbs will either end up in landfills or education and enforcement campaigns, which will consume energy as we will need "bulb police" to drive around making sure bulbs are disposed of properly. And, "proper disposal" will end up with many people driving to the recycling station with their one dead bulb thereby consuming even more energy.

Another point that Congressman Poe makes is that no CFL bulbs are manufactured in the United States and currently our entire supply comes from China. As a proponent of free trade, I have no problem with this. However, Congress and the media can come up with many problems resulting from this such as the decline in American manufacturing (not true as our manufacturing sector output is as robust as ever) or the weakening of the dollar due to trade with China (again, not true as the Chinese use most of the dollars to buy goods from the U.S. or invest in U.S. securities - the decline of the dollar is due to the Federal Reserve in Washington trying to solve other problems by inflating our currency) to name but two. Programs to "solve" the "manufacturing problem" will involve the government subsidizing the building of CFL bulb producing plants as the manufacturing of the bulbs is probably a labor intensive process which is why we purchase them from China as they can produce them cheaper than we can and, this being the case, subsidies will be required to move this job to the U.S. This government subsidized construction will, of course, consume more oil based energy further negating the benefits of the legislation.

Probably the worst negative effect of this legislation is that it will halt development of other types of energy saving light bulbs. First, producers of new technologies will have to get the technology approved and the law changed to allow their bulbs. The added cost of doing this will serve to dampen efforts in this area. Second, with use of CFL bulbs mandated by law, producers of these bulbs will have little incentive to seek new technologies since the consumption of their CFL bulbs is mandated by law.

The free market, of course, could do this job much more efficiently. Rising energy costs and rising electricity costs (assuming state regulatory authorities do away with politically imposed price caps on electricity and allow competition in this area) will induce consumers to switch to these bulbs as some are doing now (I personally use these for some of the lights in our house - mostly for ceiling lamps where their long life reduces the need to bring in a ladder and change them frequently, but would use more if electricity prices rise).

Businesses which use a lot of electricity and are looking for ways to cut costs wherever they can to stay competitive are already switching and more will follow as energy costs continue to rise. Since these bulbs can be completely recycled and some valuable materials, like mercury which, despite its environmental hazards has many economic uses, can be profitably recovered (Eastman Kodak Corp. used to be a major producer of silver - not because it was in the mining business, but because they were able to recycle / recover the small amounts of silver oxide from the film they developed - while the amount of silver per roll was tiny, when multiplied by the millions of rolls of film they developed each year, they added up to a significant amount of silver). In the absence of government intervention, large users of these bulbs will be able to profitably sell their used bulbs to recyclers. Just as many office supply stores act as collection points for computer printer cartridges by appealing either to their customers' concern for the environment or by offering discounts or free products (I trade mine for a free ream of printer paper) and then resell them to manufacturers to reuse so too, could big box sellers (who would also be big users) of the CFL bulbs offer incentives to customers to bring their bulbs in for recycling. Regardless of whether one makes a special trip, thereby wasting time and petroleum energy, to a recycling center or a side trip or extra stop while doing other errands, consumers still have to spend extra time if not petroleum energy. But, no extra time is involved in carrying a couple of bulbs to a store one is going to shop at anyway.

Despite the attempts to encourage recycling with education programs in schools, TV commercials and other advertising, less than 33% of consumers of solid wastes recycle. However, there is one exception and that is asphalt - mostly old road beds, but also things like shingles, tar paper, etc. where the recycling rate is 80%. Consumers of regular solid waste (newspapers, cardboard cartons, aluminum cans, etc), of course, are recycling mostly out of community spirit while recyclers of petroleum based asphalt are the companies involved in road and housing construction who stand to make or save money by either selling it to recyclers or recycling it themselves. Except in times of severe crisis, money is usually a better motivator than slogans.

As I pointed out in my Hub The Politics of Ethanol, in their zeal to make the U.S. "energy independent", Congress mandated that a certain portion of the fuel Americans put into their cars be American produced ethanol. The problem is, it takes a gallon of imported petroleum to produce a gallon of ethanol so, while a larger portion of the fuel powering American cars is produced in the USA, we have to continue to import an equal amount of petroleum from abroad to make our ethanol (of course the thrust of that Hub was that ethanol has nothing to do with energy independence and everything to do with buying the votes of the farmers growing the corn used to produce the ethanol thereby refuting the liberal myth that those in government are above petty pecuniary concerns and put national interest above petty things like their jobs and careers).

In my Hub entitled A Very Civil War in the Arctic I highlighted the conflicts other nations have balancing conflicting interests when I pointed out that, despite being signatories to the Kyoto Protocol on Global Warming and attempting to force, with laws and regulations, their citizens to reduce carbon producing petroleum consumption, Canada and Denmark every other month or so dispatch a naval warship to a tiny piece of uninhabited rock in the Arctic waters for the sole purpose of replacing the other nation's flag with their own (and also for their sailors to consume the bottle of the national liquor left by the crew of the other nation and replacing it their own national brand). The real reason, of course, is control of tiny Hans Island AND the 200 miles of sea bead surrounding the island. Control of the sea bed is important because that will allow the government of the nation controlling it to collect taxes and royalties on the oil that is pumped from that sea bed. Of course, any oil pumped from the waters around Hans Island, will add to the world's supply, causing its price to drop and consumption to increase - thereby increasing the amount of carbon emitted into the atmosphere which, according to current politically correct junk science, will increase global warming (a side effect which would be to make pumping oil from all over the Arctic easier) which is what Canada and Denmark, by their signing of the Kyoto Protocol, have sworn to reduce. One has to be a political liberal to understand the logic of this type of reasoning.

When watching the video take note of the Congressman in the tan jacket sitting behind and to the right of Congressman Poe in the picture. You will notice that this Congressman appears to be spending most of the five minute speech SLEEPING!

The producers of the popular TV cartoon show, The Simpson's, should take note and have Homer Simpson run for Congress. After all, with a $169,300 salary per year plus generous perks, Homer would do much better financially than he is at the nuclear plant where he spends his days sleeping on the job and eating donuts. Since it takes no more talent to sleep in Congress than at the nuclear plant and better still unlike the privately run nuclear plant, there is no Mr. Burns available to chastise or fire members for sleeping in Congress.