ABQJOURNAL OPINION/GUEST_COLUMNS: Loss of Jobs Unintended Victim of Incandescent Bulb Ban

Friday, November 19, 2010

Loss of Jobs Unintended Victim of Incandescent Bulb Ban

By Nicolas Loris
The Heritage Foundation
          Most consumers have never heard of "creative destruction." But they still benefit from it — at least, they do when it isn't forced on them.
        Popularized by Austrian economist Joseph Schumpeter, creative destruction is a theory that says the short- and long-term benefits of entrepreneurial activity and competition far outweigh the short-term losses caused by a new product replacing an old one.
        Audiotape makers, for example, may lose their jobs to the makers of compact discs, who may lose their jobs to the digital age. When it occurs organically, it's a beautiful process that begets economic progress and benefits the consumer. When forced on businesses and consumers by our government, however, it does far more harm than good. And that's exactly what's occurring with the federally mandated incandescent light bulb ban.
        In 2007, Congress passed an energy bill that placed stringent efficiency requirements on incandescent bulbs in an attempt to phase them out beginning in 2012 and replace them with more expensive but more energy-efficient bulbs, the most popular being compact fluorescent bulbs (CFLS).
        Politicians used a distorted view of creative destruction mixed with global warming concerns to sell the regulation. They said it will create jobs, save consumers money and reduce greenhouse gas emissions. But what's really happened?
        Politicians, as they typically do, fail to see the unintended consequences of their legislative agendas. When it comes to CFLs, the exposure to mercury vapor is dangerous if the bulbs are broken. Hospitals and medical charities warn that CFL bulbs cause migraines and epilepsy attacks. Other critics say CFLs do not work well in colder temperatures, emit less heat and will force Americans to use more heat. CFLs do not work well with dimmer switches and the bulb's lifespan diminishes when turned off and on frequently.
        The latest attack on compact fluorescents is jobs. The Washington Post recently ran a story on General Electric having to close its major incandescent factory in Winchester, Va. — a factory that employed 200 people. And the jobs that likely will be replacing those will be in China, where the United States gets much of its CFL bulbs because making them is labor-intensive and labor in China is cheaper than here.
        As Rep. Marsha Blackburn, R-Tenn., said, "Washington banned a perfectly good product and fired hard-working Americans based on little more than their own whim and the silly notion that they know better than the American consumer. Now, hundreds more Americans are looking for work while assembly lines in China are churning out fluorescent bulbs for the U.S. market."
        This is not Schumpeter's model of creative destruction; it's economic ignorance. If consumers really wanted to buy fluorescents rather than cheaper incandescent light bulbs, they would purchase them without a government ban. And if China produced those fluorescents, cheap imports mean businesses will find better productive uses for labor in the U.S.
        While this is likely true with or without a mandate, the difference is that the government's ban unnecessarily kills jobs. In this case, a mix of special-interest politics and concern that energy use in the U.S. is producing too much greenhouse gas emissions resulted in a needless regulation and mandates. Rather than an innovation valued in the marketplace, consumers are forced to accept a product they don't want.
        The attack on the incandescent bulb is just one in a laundry list of government regulations and mandates attempting to promote conservation.
        Energy efficiency standards all have unintended consequences that advocates fail to foresee, including more energy use. If consumers want a product, the market is capable of providing it.
        On the other hand, when the government picks winners and losers, it reduces the incentive for companies to innovate. It also increases the incentive for companies to lobby the government for special handouts and protections. When the government creates specific mandates and regulations, it purposely narrows the path businesses can take. They are policies that distort normal market forces and encourage government dependence. Other countries have adopted similar incandescent phase-out strategies.
        But that isn't cause for the U.S. to be a lemming for bad policy.

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