Edison’s words may have been true in the 1800s. Today, however, we have plenty of rules, thanks to the U.S. Congress. Some are so bizarre that you have to question the judgment of those who come up with them. One rule in particular is probably causing Edison to spin in his grave. His most famous invention, the incandescent light bulb, a mainstay in every American household for over a hundred years, has been banned by an act of Congress and will be replaced with the government-approved compact fluorescent light (CFL) bulb.

U.S. Rep. Jane Harman announced in a 2007 news release that her provision “bans Thomas Edison’s favorite oldie, the 100-Watt incandescent, by 2012, and will phase out inefficient light bulbs by 2014. By 2020, it requires that all light bulbs be 300 percent more efficient than today’s incandescents.”

Unfortunately, the federal government’s ban on products that happen to work just fine is nothing new. In writing about government-mandated products, I have noticed remarkable similarities in each case. They proceed through four phases and the light-bulb mandate is no exception.

Phase 1: Bureaucrats, “consumer advocates,” and environmentalists trumpet how wonderful the new product is. The extensive hoopla surrounding it can be boiled down to just two claims: big savings for the consumer and benefits to the environment.

The Department of Energy (DOE) and the Environmental Protection Agency (EPA) began to promote CFLs in 1999 with their “Change a Light, Change the World” program. The DOE’s and EPA’s promotional (lobbying?) efforts were directed at members of Congress and governors, plus state and local officials, to encourage their constituents to participate. In 2006 then-Secretary of Energy Samuel Bodman said: “Here’s a simple step we can take to preserve energy resources, save money and help the environment.” This is the typical approach that the government uses to influence the marketplace. The government never states that its chosen prod-uct is better.

The “big savings” never refers to the retail price. This is because the government-endorsed products are always more expensive than the consumer-endorsed alternatives. A 75-watt incandescent bulb at my local Kroger store costs 22 cents. The 20-watt CFL (advertized as equivalent to the 75-watt bulb) costs $5.49–25 times more expensive. A three-way incandescent bulb (50-100-150 watts) costs $1.25. A three-way CFL (12-23-32 watts) costs $13.12. That’s ten-and-a-half times more expensive. So when the government, environmentalists, and consumer advocates talk about big savings, they are obviously not talking about the upfront cost. They mean the operating cost over the life of the product. CFLs are advertised to last up to ten times longer than the incandescent bulb and use 75 percent less energy.

In the not-too-distant past, patriotism was exploited by the government to elicit a desired response from its citizens. Today, it is environmentalism. This has become our de facto state religion. When the government says that we need to do something because it is good for the environment, we are expected to take it on faith. We are not to question the government’s motives or logic for taking away our freedom of choice, but are expected to feel good about forgoing our selfish consumer desires because there is no higher calling in this country than saving the environment.

Rejected by Consumers

Phase 2: Consumers weigh the advantages and disadvantages of this wonderful product and decide that it is not really that wonderful after all.

CFLs have been on the market for some time, but so far consumers have not been impressed. Besides being expensive and strange looking, the light quality doesn’t seem to please people. They are not as good for reading as incandescent bulbs are, for example. Many also complain that the bulbs flicker and buzz. Dimming the intensity of CFLs also poses a problem. It would appear that consumers have a very clear choice: They can pay more for the new inferior government bulb or pay far less for a superior existing product. This might help to explain why CFLs made up only 5 percent of the light-bulb market last year, according to H. Sterling Burnett of the National Center for Policy Analysis.

I have been trying one of these bulbs above the sink in our kitchen. When I get up in the morning to make coffee, I flip the switch—but the light doesn’t really turn on. It starts off with a faint glow that gradually brightens for two to three minutes until fully illuminated. To get the lighting I want I must also turn on the light over the stove (one of those bad incandescent bulbs) because it brightens immediately. So now I am using two lights instead of one. Because turning the CFL on and off is so annoying, it is the one light in the house that we tend to leave on all the time. Why not? It’s so cheap! This situation is analogous to what happened when the government imposed CAFE fuel-efficiency standards: People drove more.

Mandated by Government

Phase 3: Hating to have their recommendations ignored by the ignoramus class, the miffed elitist class takes steps to mandate their beloved product.

Here is a question that never gets a direct or honest answer: If these economical and environment-friendly products are so wonderful, why is it necessary to outlaw competing products? The unsaid answer appears to be: The government, consumer advocates, and environmentalists know what’s best for the consumer.

As Ed Feulner, president of the Heritage Foundation, put it, “It’s only inferior or unnecessary products that require congressional intervention to survive. Useful or innovative products thrive on their own.”

When Rep. Harman introduced the bipartisan ban on the Edison light bulb, she said, “Only 10 percent of the power used by today’s incandescent bulbs is emitted as light, while the other 90 percent is released as heat.” Let me see if I have this right. Here in Michigan, where we have long, cold winters, the incandescent light bulbs in our family room actually help keep my wife, daughter, and me warm while we watch TV and read. Since the lights in the rest of the house (except for the light over the sink) are all off, why is this considered a problem? In the summer, when it gets dark later, we hardly use the lights. So I fail to see why this issue demands heavy-handed congressional intervention.

The Energy Independence and Security Act, signed by President Bush in 2007, contained the incandescent ban, but it also included a Consumer Awareness Program, authorizing $40 million to help consumers make energy-efficient lighting “choices.” Thus as the government takes away our freedom of choice, it also spends our money to convince us that we really have a choice.

Bad Product

Phase 4: It becomes clear that the consumer’s reluctance was justified. The product is in fact bad. But it doesn’t matter because the old product that worked has been outlawed.

The DOE guidelines for CFLs suggest that they be left on for at least 15 minutes after they are turned on, prompting Andrew Ferguson of the Weekly Standard to comment, “Odd, isn’t it—an energy-saving device that you’re not supposed to turn off?” It turns out that the lifespan of a CFL depends on how many times you turn it on and off. Failure to keep the light on causes the bulbs to burn out just as fast as the Edison bulbs. There go those big savings. So try to get in the habit of not turning off the lights after using the bathroom, a closet, or the laundry room. However, plan to come back 15 minutes later to turn off the light.

And while CFLs that are left on may last ten times longer than incandescent lights, no one is saying that they will fully perform for that long. A Department of Energy study found that after 40 percent of the advertised service life, a quarter of the CFLs started to become dim bulbs. If you don’t mind having dim bulbs for 60 percent of the service life, then CFLs should make you happy.

While these mandated lights may be great for the environment, they are not so great for humans. In some people they trigger headaches or even migraines because of the nearly imperceptible flickering. The BBC reported that the bulbs can also increase the risk of seizures in people with epilepsy. According to the Winnipeg Free Press, the United Kingdom’s Health Protection Agency recommends that people be no closer than about a foot from these lights for more than an hour a day. The ultraviolet radiation emitted by CFLs is like direct sunlight on bare skin. Thus the government is mandating that we all have miniature sun lamps throughout our homes.

But maybe the government light bulb is not really good for the environment after all. It turns out that the each CFL contains five to ten milligrams of mercury. Mercury is one of the most toxic substances on earth; it can cause serious health problems, including nerve and kidney damage. The mandate will result in millions or billions of CFLs ending up in landfills where the mercury will leach out to contaminate the soil and groundwater.

So how do CFLs fit with the EPA’s recommendation that we purchase mercury-free products? It explains that the amount of mercury in the bulbs is much smaller than the amount in old-fashioned thermometers (which are disappearing from households) and watch batteries. Both statements may be true; however, I have never had a thermometer or watch battery explode, shatter, or break the way a light bulb does. It was also my choice to have, or not to have, a mercury-filled thermometer or watch battery. The EPA’s final defense is that the health and environmental risks of CFLs are insignificant compared to the risk presented by the mercury put out by coal-burning power plants.

So what happens if a CFL next to my daughter’s bed breaks? According to the EPA guidelines, I am to: 1) open the windows and evacuate the room for 15 minutes; 2) shut off the heating or air-conditioning system; 3) carefully scoop up the glass using stiff paper and place it in a glass jar or sealable plastic bag; 4) after vacuuming, wipe the canister and put the bag or debris in a sealed plastic bag; and 5) throw away clothing or bedding that comes in contact with the broken glass or the mercury-containing powder. I must not wash contaminated clothing or bedding because mercury fragments may also contaminate the washing machine or pollute the sewage.

Has this convinced you that the health and environmental risks of CFLs are minor?

As a result of the Energy Independence and Security Act, we will be forced to buy new light bulbs for every room in the house that are more expensive, of lower quality, dangerous to our health, and bad for the environment. Given this government mandate, the consumer has three options. The first is to go out and buy up all the old-fashioned Edison bulbs before they become illegal. The second option is to try to get a family discount on hazmat suits. The final option is to just say no to dim bulbs. U.S. Rep. Michele Bachmann has proposed the Light Bulb Freedom of Choice Act. She is facing extensive opposition from the green lobby, big government, and consumer groups. Sadly, fighting for freedom in this country has become an uphill battle.

It’s funny how an innocent little word like “big” can be used to help conjure up images of corruption. Just think of what’s usually meant by “big oil,” “big drug companies,” and “big corporations.”

But are big businesses inherently bad, as some would like us to believe?

Consider that when markets are free, there’s only one way for a business to become big: by pleasing a growing number of consumers. There’s simply no such thing as a corporation that expands by selling what no one wants or by charging higher prices than people are willing to pay. It can achieve growth only by profitably accommodating consumer wishes. Otherwise, consumers will withdraw their patronage and bequeath economic power to the derelict company’s more worthy competitors—or if there are no competitors, consumer desire will invite them.

Thus in a free-market system, consumers are the real power brokers. As Ludwig von Mises put it, “On the market of a capitalistic society, the common man is the sovereign consumer whose buying or abstention from buying determines what should be produced and in what quantity and quality. . . . Big business always serves—directly or indirectly—the masses.”¹

But in a semi-free-market system, such as ours, there’s a second way a business might get bigger: through government largess. For instance, let’s say Widgets Inc. has hit on hard times—competitors are running rings around it. Widgets’ chairman of the board, however, has “friends” in Washington. Before long, Widgets’ chief competitor is struggling to fend off the Justice Department’s Antitrust Division. The scales have been artificially tipped. Consumer Will has been usurped by Political Pull.

Another example: XYZ Corp.’s revenues have tanked, and it needs cash now to stay afloat. But its credit is already overextended. It just so happens, though, that the company sits in the district of a powerful congressman. XYZ gets a federal bailout.

Here again, the scales have been artificially tipped. Where people wouldn’t willingly spend their money in their capacity as consumers, they were forced to spend it in their capacity as taxpayers. Free markets were trumped by political freewheeling.

Now, most everyone knows shady things like that go on. Such political favoritism, in one variation or another, is practically an everyday occurrence. But people tend to confuse the sickness with the symptoms. They observe that the injustice is associated with business, and on that basis conclude that “free markets” are to blame and that government should “rein in corporations.” But failing to distinguish government meddling from free markets just because both involve business is like failing to distinguish shoplifting from buying just because both involve goods on the store shelf.

The term “free market” doesn’t refer to politicians’ being free to decide who wins and loses in the market. It refers to the market being free from government tampering and control—which it clearly isn’t in scenarios like those mentioned. The real problem, then, isn’t that business corrupts the political process, but rather that politics corrupts the business process.

Regardless of how big his company is, a businessman acting on his own can’t physically force anyone to do anything. A storeowner, for instance, has no more right to pull a gun and make you buy his goods than you do to pull a gun and seize them. For a business to physically force you to do something, it must in some fashion tap into the political muscle of the state. This is true, because, as Ayn Rand wrote, “a government holds a legal monopoly on the use of physical force.” She continued: “The nature of governmental actions is: coercive action. The nature of political power is: the power to force obedience under threat of physical injury—the threat of property expropriation, imprisonment, or death.”²

In light of that, consider, for example, a burgeoning criticism of big developers: that they’re using eminent-domain laws to force property owners to sell their land.³ The evil here isn’t that the developers are “big,” or that they want to buy land, or that they want to build shopping centers. It would be just as wrong if the situation were reversed and “the little guy” was using eminent domain to force corporate giants to sell off their property.

Government Compulsion

The root of this wrong is the government—underwritten as always by law—compelling innocent parties to act against their will. It is because of such injustices that Frédéric Bastiat laments in the opening lines of his 1850 classic, The Law: “Instead of checking crime, the law itself [has become] guilty of the evils it is supposed to punish.”⁴

There’s certainly nothing commendable about a businessman who solicits bureaucrats for favors. But worse than that is the politician empowered to dole them out. Who’s more villainous—a crook who’d like to steal your car or a cop who hands him the keys?

And what of the honest businessman, who desires simply to sink or swim by his own ability? Well, he’s in a quandary. Since we don’t have an unfettered free market, he’s in the position of either being at the mercy of those with political pull or of having to lobby for the “privilege” of being let alone. Again, who’s worse—the guy who pays protection money or the thugs who require it of him.

It’s ludicrous to fault free enterprise for what are actually violations of free enterprise. It’s absurd to ascribe to capitalism the sins of statism. If there’s any “big” to beware, it’s big government.

Notes

1. Ludwig von Mises, The Anti-Capitalistic Mentality (South Holland, Ill.: Libertarian Press, 1972 [1956]), pp. 1–2.
2. Ayn Rand, “America’s Persecuted Minority: Big Business,” in Capitalism: The Unknown Ideal (New York: New American Library, 1967), p. 46.
3. See, for example, Steven Greenhut, “Costco’s Big-Box Political Clout,” Orange County Register, July 23, 2002; www.ocregister.com/commentary/columns/greenhut/2002/greenhut20020623.shtml; and Ron Scherer and Adam Parker, “Brooklyn Brouhaha: The Controversial Drive to Host a Sports Team,” Christian Science Monitor, February 4, 2004, www. csmonitor.com/2004/0204/p02s01-usgn.html.
4. Frédéric Bastiat, The Law (Irvington-on-Hudson, N.Y.: Foundation for Economic Education, 1974 [1850]), p. 1.

Because the welfare state tends to expand slowly, however, this atrophy is slow. That is why it is rarely perceived. I came to appreciate it only after having lived several months in the United Kingdom, where the welfare state has progressed a few steps further than it has in the United States. The difference this makes in people’s abilities to form independent judgments is remarkable. The extent to which Britain’s government either makes decisions for people or insulates them from any untoward consequences from having chosen badly has resulted in grown men and women who increasingly find themselves unable to negotiate a business or employment contract, buy a car, decide or even think about health care, provide for their own or their families’ well-being, think and plan ahead, weigh short-term against long-term interests, judge their children’s educational program, and on and on. If you treat people like children, and structure their world so that they can only act like children, it should be no surprise if what you get is a population with the judgment and intellectual maturity of, well, children.

And now comes Barry Schwartz, a professor of psychology at Swarthmore College, writing in the New York Times (January 22, 2004) that “there is growing evidence” that “for many people, increased choice can lead to a decrease in satisfaction.” Why? It “makes people feel worse” when they have to decide among too many kinds of jam or chocolate (Schwartz’s examples) because “increased choice creates an enormous burden on people to seek the information needed to make a good decision”; moreover, “plentiful choice increases the chances that people will regret the decisions they make, because of all the bypassed alternatives, many of which might have been better.” “Indeed,” Schwartz warns, “there may be a point when choice tyrannizes people more than it liberates them.” He concludes: “The implication of this news, both for individuals and for government officials, is that sound social policy simply cannot consist of throwing an ever-greater menu of options at the American people.”

Of course, the real implication of Schwartz’s view, which he refrains from stating explicitly, is that some people—perhaps Schwartz himself and his fellow researchers?—will have to limit the options available to all the rest of us, who, lacking judgment and intellectual maturity, just could not handle them all. One wonders how Schwartz and the other experts would escape the paralysis, depression, regret, and ultimate tyranny resulting from having to choose which options to make available to us. One might also wonder about Schwartz’s apparent worldview in which the government possesses all the things people might want or use, and therefore must decide whether to offer them or not.

But the real perniciousness of Schwartz’s argument is its tendency for self-fulfillment. Slaveowners in the antebellum South sometimes argued that they could not in good conscience free their slaves because the slaves were unable to fend for themselves; they were just too unskilled or unintelligent or uncivilized to figure out what to do, where to go, and how to get what they needed. Thus simply turning them out into the cold threatening world would be to treat them cruelly, not humanely—like abandoning a five-year-old child in the middle of the forest and expecting him to survive on his own.

Imagine your reaction to an eighteenth-century researcher who presents “evidence” that when slaves are given the choice of jam or chocolate, they do not feel liberated but instead are uncertain, confused, even paralyzed. That would prove it, then: “sound social policy simply cannot consist of throwing an ever-greater menu of options at the American [slaves]”; more choice “tyrannizes [slaves] more than it liberates them.” What a transparently self-serving argument that would be! You would reject it summarily.

But that is Schwartz’s argument. Only this time it is not about slaves or children. It is about ostensibly free adults.

Self-Doubting Americans

Perhaps there were American slaves who themselves believed they were unable to manage their own lives, as today there are Americans who think that government experts need to make decisions about which medicines people should take, what constitutes a just employment contract, how to educate children and provide for people’s retirement, and so on. As Schwartz writes, “Who has the time to find the best digital camera, the best cellphone plan, the best 401(k), the best health insurance or the best school for his children?”

Well, I do, for one, as do millions of other people who make decisions about these things daily.

But Schwartz would have us turn over all these decisions to the government experts instead. Yet in addition to the fact that “individuals are the best judges of their own welfare,” which Schwartz takes to be the only support for individual freedom, it is also true that no one other than the individual in question has the proper incentives to make good decisions. If the government expert makes a bad decision, its consequences are suffered by everyone under his purview—which on Schwartz’s view would be just about everybody.

By contrast, if an individual makes a bad decision, its consequences redound essentially to that individual himself. Even if they also affect his close family or friends, that is a significantly smaller problem than the catastrophe of one distant expert’s making a bad decision for everyone.

This precisely explains what we see: when the freedom to choose and the responsibility for one’s choices are respected, one develops judgment and independence; one becomes an adult. When that freedom and responsibility are taken away, however, judgment atrophies and one becomes dependent, like the slave or child.

In the end, what we want the government to do depends on what kind of people we want. If we want a docile, servile, dependent populace, then we should take Professor Schwartz’s advice and continue extending the welfare state apace. If, on the other hand, we want a free and responsible populace—along with all the diversity, unpredictability, and independence that comes with it—then we should stop the welfare state in its tracks.

It is probably clear that I endorse the latter course, and that I find arguments like Professor Schwartz’s to be contemptible. Freedom is a bracing thing, and it does indeed entail both successes and failures, not to mention hard work. But what in this life that is worth having does not?

—James R. Otteson

Department of Philosophy

University of Alabama

According to Deborah Miller of the Air Conditioning and Refrigeration Institute (ARI), “the DOE, in its own words, ‘rushed’ to publish a proposed new rule. It cut short the comment period; new analyses were injected into the record with only nine days left in this abbreviated period; it ignored its statutory mandate to balance economic interests in the rulemaking; failed to consult the Department of Justice on the impact 13 SEER would have on competition; and published a new rule of 13 SEER ‘literally in the final minutes of the last administration.’”¹

On January 22, 2001, the last day on which Clinton administration regulations could be published, the final rule mandating a 30-percent increase in the heating and cooling standards appeared in the Federal Register.² From a political standpoint, this administrative legerdemain was pure genius. By throwing these restrictive regulations over the fence, the outgoing administration’s legacy of being “for the environment” was preserved without any of the negative green baggage that so often evokes the wrath of consumers. Nevertheless, under the new, more-stringent environmental standards, the cost of air conditioners and heat pumps will go up $274 to $687.³

The incoming Bush administration had three options (all unsatisfactory) in dealing with the left-behind hot potato.

Option 1:

Just say no and repeal the regulation. Benefit: Momentarily keeps one onerous regulation at bay. Downside: High risk (99.99 percent) of being branded “anti-environment” by the media, environmentalists, and the Earth-first politicians. (Remember what happened with the arsenic-in-water standard?)

Option 2:

Hold your nose and simply accept it as written. Benefit: An absence of negative media coverage. Downside: Consumers are saddled with still more restrictive environmental regulations of dubious value. Ironically, the label “pro-environment” does not come with this option. The best that can happen is that the phrase “anti-environment” will not be used as frequently.

Option 3:

Propose a watered-down or “lite” alternative. Benefit: Although still bad, this is not so bad as the regulation proposed. Downside: High risk (99.98 percent) of still being branded “anti-environment” by the media and environmentalists. It is interesting that the vitriolic response accompanying this option is exactly the same as if the regulation had been withdrawn. Since there is never any distinction made between the out-and-out repeal and the watering down of a bad environmental regulation, why ever settle for half measures?

As it turns out, Option 3 was the path that the Bush administration chose. On April 13, 2001, the Department of Energy (DOE) announced its intention to raise the existing standards by 20 percent instead of the proposed 30 percent. The SEER value would be raised from 10 to 12 (instead of 13). The higher standards would take effect January 2006.

How was this 20 percent increase in the SEER value received? The Natural Resources Defense Council was typical: “This latest rollback . . . hurts the consumer and the environment.”⁴ Only in Washington is a 20 percent increase called a rollback.

What seems to be lost in the debate over heating and cooling standards is the consumer. There are two possible questions that could be asked. The appropriate question is: What does the consumer want? The inappropriate and elitist question is: What is best for the consumer?

The answer to the first question is always the same, no matter what the product. Consumers want choices. They want a number of options so that each buyer can pick the most suitable product. When it comes to purchasing an air conditioner or a heat pump, these options relate to the upfront cost, annual operating cost, aesthetics and special features, size of the unit, reliability, and performance. Other factors that influence a consumer’s choice include his or her age, family size, financial status, and location.

Consumer Forgotten

Unfortunately the federal government never asks, nor does it want to hear, what the consumer really wants. Since it is predisposed to solutions based on central planning, should it come as any surprise that officials turn only to like-minded advocates of central planning for advice, guidance, and direction? The government’s summary dismissal of the true interests of consumers is legitimized by a self-appointed coalition that thinks it knows best: the “consumer advocates” and environmentalists.

According to Andrew deLaski of the Appliance Standards Awareness Project, more than a hundred organizations support the SEER 13 standard.⁵ It would be interesting to know how many of these consumer-advocate groups even bothered to survey people on what they really want. Maybe the public is not interested in what these “consumer advocates” are advocating: fewer choices and higher prices. As Thomas Sowell put it, “Indeed, there are no requirements for any knowledge whatsoever to become an environmentalist or a consumer advocate. There are more qualifications required to become a taxi driver or a meter maid than to engage in any of a number of busybody occupations that are taken seriously in the media, as if they represented expertise on something.”⁶

When viewed in total, the evolution of government-mandated products, whether the toilet, the washing machine, or the air conditioner and heat pump, displays several disturbing principles⁷:

First, the right to choose is anathema to proponents of central planning. The elimination of the consumer choice is based on the attitude that people are not bright enough or informed enough to make the “correct” decision when left to their own devices.

There is nothing high-tech or mysterious about either the 20 percent increase or the 30 percent increase in efficiency standards. According to the Appliance Standards Awareness Project (one of the standard’s advocates), “manufacturers have successfully marketed SEER 13 air conditioners, now considered “mid-efficiency” units, for more than a decade. The most efficient units available reach SEER 16 or higher.”⁸ (Apparently the free market works just fine without government mandates.) The real problem is that consumers have chosen to ignore the government and environmentalist endorsement of the more-expensive systems for the reasons mentioned. The consumers’ rejection helps explain why government products are mandated while preferred, free-market products are outlawed.

Second, central planning, by definition and in practice, undermines competition and innovation. The Department of Justice concluded that the SEER 13 mandate would have “a disproportionate impact on smaller manufacturers. Currently less than 20 percent of the total product lines meet the proposed government standards.

Early in the twentieth century two prominent Americans, one a capitalist, the other a socialist, enunciated surprisingly similar views on the relationship between product differentiation and consumer welfare. The capitalist, Henry Ford, had revolutionized the young automobile industry, using mass-production techniques to provide cheap cars to American consumers. But Ford did not believe in offering product variety. He produced only one model, the famous Model T, and, in his typically blunt way, stated his policy on consumer choice of colors as: “Any color, so long as it’s black.”¹

During the same era the socialist novelist Upton Sinclair published a popular and influential novel, The Jungle (1906), which stated his views on the unimportance of consumer choice. Sinclair felt variety in consumer goods was a frivolous waste of resources, which could be eliminated under socialism. One of his socialist characters says, “consider the waste in time and energy incidental to making ten thousand varieties of a thing for purposes of ostentation and snobbishness, when one variety would do for use!”² And another socialist speaker says, “Since the same kind of match would light everyone’s fire, and the same-shaped loaf of bread would fill everyone’s stomach, it would be perfectly feasible to submit industry to the control of a majority vote.”³

Ford and Sinclair both actively opposed variety in consumer goods. How did their ideas fare in their respective economic systems, capitalism and socialism?

Sinclair dabbled in politics, but never acquired enough power to implement his ideas. However, his socialist brethren later took control of Russia, Eastern Europe, China, and Cuba, as well as other countries. Thus while there were no socialist economies when Sinclair wrote The Jungle, the world since has seen many actual socialist economies at work. None used democratic votes to determine the kind of matches or bread produced, but all used government to make these determinations, and all offered consumers very limited choices within product categories.

Socialist governments adroitly rejected majority rule in consumption decisions. If everyone wants the same kind of bread, why even have a vote? Everyone knows what everyone wants, so just let anyone make the decision. Well, not just anyone: officials of the Socialist Party should make the decision. The argument that socialists with the interests of the masses at heart could easily make decisions for them was often advanced as a rationalization for the political dictatorships that dominated socialist economies in the twentieth century.

Although rejecting majority rule, the socialist elite did institutionalize the one-size-fits-all consumption doctrine espoused by Sinclair and others. Socialist governments forced consumers to all consume the same goods, or none at all. Perhaps the most compelling image is that of millions of Chinese communists, all dressed in the same drab, ill-fitting clothing.

But the one-size-fits-all doctrine is rather odd, and raises an interesting question: Why should it be assumed that everyone wants the same things? Where is the evidence for this? In fact, there is plenty of evidence against Sinclair’s assumption. When people are given choices among kinds of matches, bread, cars, houses, and so on, as they are in market societies, they do not all choose the same things. They choose a variety of products, revealing that their tastes and preferences are not identical. And in economies where variety in consumer goods has been limited by central planners, people quite eagerly pursue it when it becomes available.

Stories of Russian consumers trying to buy blue jeans and other personal belongings from Western tourists were commonplace for many years before the fall of the Soviet Union. In the early 1980s when communist China liberalized its economy to allow more consumer choice, Chinese consumers immediately began to reveal the variety of their tastes. Drab clothing was among the first things to go. A Chinese newspaper cheerfully reported: “The times of greys and blues and uniform dressing are gone forever.”⁴ Another observer reported: “At the television counter of the No. 1 department store, a salesman named Wei Teng Jun referees while his customers debate the merits of the 10 brands made in Shanghai. ‘They are very brand conscious,’ he says.”⁵

A longing for both plenty and variety in material goods was certainly an important element in the social and political unrest that brought down the socialist systems of the Soviet Union and Eastern Europe. The one-size-fits-all doctrine did not serve consumers well, but once institutionalized in socialism, it stayed in place for decades. Thus, socialism was quite kind to Upton Sinclair’s anti-variety doctrine.

Consumers under Capitalism

How did capitalism treat the somewhat similar ideas of Henry Ford? The answer is found in the history of the U.S. automobile industry in the 1920s and ’30s. Early on, Ford’s simple, cheap, black Model T dominated the automobile market, sending Ford’s market share soaring to 59 percent in 1921.⁶ General Motors, in contrast, was a small firm at this time, with only 16 percent of the market in 1924.⁷ However, unlike Ford, it had embarked on a course of product differentiation, offering cars in “a wide variety of makes, models, colors, interiors, and equipment,” and making annual model changes.⁸ By the mid-1920s consumers were deserting the standard black Model T in droves and buying instead the more varied, stylish, distinctive cars sold by GM. By 1927 GM’s market share had rocketed to 43 percent, while Ford’s had plummeted to about 10 percent.⁹ Belatedly, Ford scrapped the Model T and introduced the Model A, recapturing some of its market share over the next three years. However, in time the Model A became as boring to consumers as the Model T had been, and Ford’s market share began to decline again, never to revive in this era. By the end of the 1930s GM’s market share was approaching 50 percent, while Ford’s was below 20 percent and still falling.¹⁰

In a competitive free-market economy a Henry Ford has no power to force all citizens to consume the same products. Rivals like GM are free to enter the market and compete by offering variety. Consumers, in turn, are free to choose among products. If Ford had been right that consumers were not interested in color and variety, his sales would have gone up and he would have made profits. Since he was wrong, his business and his fortune suffered.

Capitalism versus Socialism

The contrast between capitalism and socialism could not be more pronounced. Capitalism provides a mechanism for testing the validity of ideas like those put forth by Ford and Sinclair. Capitalist entrepreneurs must back up their ideas by putting their money at risk. There is competition among entrepreneurs and thus among the different theories about what consumers want. The market carrot-and-stick mechanism rewards the correct ideas with profits, and punishes the incorrect ideas with losses. Thus consumers are the ones who determine which ideas and economic theories survive in the marketplace.

Under socialism, however, political power determines economic patterns. Political figures and intellectual theorists who gain control are able to impose their ideas on consumers. The people with political power have a monopoly on that power, and thus do not allow other ideas to compete with their own. Ideas like those of Sinclair survive and dominate, not because they have passed a test of serving consumers well, but because they have the backing of the police power of the state, and, sometimes, of a police state. Bad ideas can survive so long as political power survives.

The implications of this contrast between capitalism and socialism were strikingly visible in the hours after the fall of the Berlin Wall. East Germans, victims of a system that had enshrined Sinclair’s vision in drab uniformity, streamed into West Berlin and were stunned by the quality and unimaginable variety of goods available there in the stores. If the Henry Fords of the capitalist world had had their way, West Berlin would have been nearly as drab as East Berlin. But happily, capitalism provided a marketplace forum for more imaginative entrepreneurs to challenge the Henry Ford view of the world. Because the challengers prevailed, what East Germans feasted their eyes on in West Berlin showed the astounding contrast between 40 years of market-driven product development and differentiation in the West, and 40 years of politically driven product stagnation in the East.

Notes

1. Robert Lacey, Ford: The Men and the Machine (Boston-Toronto: Little, Brown and Company, 1986), p. 284.
2. Upton Sinclair, The Jungle (New York: Buccaneer Books, Inc., 1984 [1906]), p. 333.
3. Ibid., p. 331.
4. June Kronholz, “Buying Spree,” Wall Street Journal, October 26, 1983, p. A1.
5. Ibid.
6. Arthur J. Kuhn, GM Passes Ford, 1919–1938: Designing the General Motors Performance-Control System (University Park, Pa.: Pennsylvania State University Press, 1986), p. 312.
7. Ibid., p. 313.
8. Ibid., p. 89.
9. Ibid., pp. 312–13.
10. Ibid., p. 312.

One of the distinguishing features of a free-enterprise economy is that its coercion is veiled. . . . The fact that people must earn before they can eat is a commonly recognized connection between need and work, but it presents itself as a natural link embedded in the necessity of eating rather than as arising from a particular arrangement for distributing food through market exchanges. . . . Presented as natural and personal in the stories people tell about themselves, the social and compulsory aspects of capitalism slip out of sight and out of mind. . . . Far from being natural, the cues for market participation are given through complicated social codes. Indeed, the illusion that compliance in the dominant economic system is voluntary is itself an amazing cultural artifact.¹

What is really amazing is how these three historians misunderstand the market process, especially the way it evolved naturally, over millennia, through trial and error–motivated by the efforts of all buyers and sellers to advance their well-being. This is not “far from being natural”; it is as natural as breathing. Furthermore, these authors make it sound as if capitalism became dominant because some authority imposed it on humanity. But history (especially recent history) clearly shows that capitalism won out over such competing systems as socialism because it works, while the competing systems failed miserably. To say, almost with an air of disdain, that capitalism is the dominant economic system, is like complaining that diesel locomotives have “dominated” (and replaced) the less-efficient steam engines. Historians, even more than others, should possess a greater ability (or willingness) to distinguish between mere metaphorical “force” and actual force.

We also need to examine the notion that injustice and exploitation exist whenever people are “forced” by circumstances to accept dangerous or low-paying jobs, or to buy products from capitalist firms. This deterministic view ignores the fact that the human race as a whole is indeed “forced” either to work for its bread or to starve–and to purchase most goods and services from someone, since humanity has long since passed the primitive stage in which each farm-household was self-sufficient and able to make everything it needed. To write their book, the three historians would formerly have had to buy a typewriter from a capitalist firm or write the entire manuscript in longhand, a laborious and time-consuming process. More likely, they purchased a word processor or personal computer and wrote their book far more efficiently. Were they “forced” to do so–or did they do it because they saw the tremendous advantages of such electronic equipment?

As for employment, accepting the best (or only) offer available, as unattractive as it might be, is not the equivalent of slavery–a situation in which actual violence, or the threat of it, is used to compel people to labor without pay and without the option to seek other work. That circumstances limit one’s choices does not prove that one has neither the capacity nor the opportunity to choose, since everyone’s choices are limited.

Having few alternatives instead of many is hardly the same thing as being compelled by physical force to make a particular choice. A merchant who is driven by competition to sell his wares at lower prices than he had hoped might just as well complain that he too is a victim of circumstances, “forced” to sell at “unjust” prices. In fact, quite a few businesspeople have been saying exactly that for a long time–complaining about competitors undercutting their prices–which is why U.S. manufacturers constantly beseech Congress to enact higher tariffs to stop the Japanese and the Taiwanese from “dumping” low-priced goods on the U.S. market. This is also how the so-called “Fair Trade” laws–a domestic version of the same principle–came to be passed. (Fortunately, they were repealed some years ago.)

And speaking of prices, it would be well to remember that capitalism’s critics, especially during the 1970s, were bewailing the rising prices that government-produced monetary inflation had caused, blaming them on corporate “greed.” Yet the falling prices of the subsequent period, especially noticeable in the case of PCs, VCRs, cellular phones, and other new technology, seem to have largely escaped the notice of such critics.

If the three historians were looking for “compulsory” features in an economic system, they should have been examining socialism, not capitalism. It is precisely the competitive aspects of the capitalist market that assure consumers real choice, instead of the compulsion of having to buy one government-manufactured product without competitive models to choose from. Indeed, at other times, writers with such views-when they let their guard down-complain about how capitalism has produced too much and allows for too many choices! French Marxist writer Simone de Beauvoir, visiting America, complained of the “shameless profusion of goods” in the drugstores.²

The Illusion of Corporate “Power”

Often critics of capitalism complain that corporations undermine democracy because of their possession of such economic assets as buildings, capital equipment, and large sums of money. The critics sometimes claim that the assets of the larger corporations exceed the GDPs of some smaller nations. But it is hardly fair to contrast corporate assets–which were gained by producing and selling goods consumers were willing to buy–with the revenues of governments, which extract taxes by genuine compulsion, or the threat of it. If I refuse to use Microsoft Word for Windows on my home PC and stick to Word Perfect for DOS instead–as indeed I still do–nothing happens to me. If I refused to pay my taxes, little imagination is required to predict what would happen to me. To harp about nothing but corporate “compulsion” in the face of the horrendous atrocities and injustices perpetrated by governments, especially during the twentieth century, is the height of folly. If corporations ever did take over and begin ruling the world, as some Marxist writers think they might, this could hardly be worse than having governments rule the world.

Critics of capitalism seem to treat current corporate control of economic assets as if it were permanent and unassailable. But just as “God is no respecter of persons,” capitalism is no respecter of corporations. Firms that sell products consumers do not wish to buy either go bankrupt or lose money on the product and soon discard it, as Ford did with the Edsel.

The history of capitalism is littered with such examples. There was a time, not so long ago, when Sears had such a vise grip on American retailing that it looked like no power on earth could upset its hegemony. Then along came a small, little-known regional chain of stores called Wal-Mart–ruthlessly efficient and catering quickly and responsively to consumers’ needs–and it knocked Sears right off its perch. There was a time when Sears executives would have laughed at the mere mention of Wal-Mart. But now they must be weeping instead, since by the late 1990s Wal-Mart’s sales figures were more than double those of Sears. That’s not the end of the story, however. Wal-Mart is now experiencing competition from merchants on the Internet, which might eventually spell disaster.³

At IBM during the early 1980s, who would have believed that the tiny firm from which it licensed its operating system–Microsoft–would by the late 1990s have a market value almost triple that of IBM? But that is just what happened. As these examples show, the “control” of economic assets under capitalism is hardly as permanent and threatening as it is made out to be. Since it is constantly in flux and highly transitory, changing hands from one competitor to another at the whim of consumers, how can anyone contend that this wealth is “controlled”?

The “corporate control” argument also insinuates that capitalists will typically make the right decisions and use their assets efficiently, in order to maintain that “control.” But many don’t, and they are the firms that soon miss the market dominance they might have obtained. Xerox may be the prime example. It invented its own personal computer, as well as the graphic user interface, the mouse, and PC networking–before such competitors as Apple Computer did. If Xerox had simply followed through effectively on the technological breakthroughs it already possessed, it would have reaped billions and would probably have controlled the PC market for years. But Xerox top management, not very farsighted, saw little market potential in these innovations; and when it finally rolled out its PC products, they were too late, too high-priced, and too clumsily marketed.⁴ Having such “control” over product research and development was no help to Xerox in that industry.

Blame Enough to Go Around

A noteworthy feature of the argument that the free market is actually an instrument of coercion is that huge corporations are not the only ones blamed. Soon it becomes self-blame. For example, a college student recently claimed that “each and every one of us is at fault [for poverty]. In tolerating and even supporting a viciously capitalistic society, we are to blame.”

Another writer maintained that “the real responsibility lies with the consumer. . . . We are to blame for the logging of the rain forest, ozone depletion, unsanitary work conditions, sweat shops, child labor violations, sexism, racism, homophobia and human rights violations every time we put money toward a company that participates in or indirectly contributes to these transgressions. When money is put toward a product, we essentially reinforce everything else the manufacturing company is doing.” (This brilliant analysis was the product of a journalist. Kalle Lasn, previously a documentary filmmaker, similarly advocates holding shareholders personally responsible for corporate misbehavior.)⁵

Clearly, these writers’ self-blame overrules their logic. Politicians routinely deceive their constituents, abuse their powers, sell their votes to vested interests–and vote to finance wars on other nations. In the twentieth century alone, wars claimed tens of millions of lives. So, by using the same reasoning, anyone who has ever cast a vote for a politician should share the blame for his actions and their consequences, which are often deadly. The only way to avoid taking on this burden of accountability would be to avoid voting altogether–making monarchy morally superior to democracy.

In much the same way, to befriend someone would imply moral indifference to every sin that the new friend might have ever committed. Living up to this standard–by reserving one’s friendship only for those without sin–would result in a very lonely world indeed. This consumer-responsibility argument, however, has been used very selectively. Boycotts were organized against companies that did business with South Africa, since buying their products was said to support apartheid. When Western firms started trading with the USSR and Maoist China, however, it was said that buying their products did not imply support for those governments, but was rather a contribution to world peace and understanding.

Benevolent Lies

The corporate “coercion” idea implies that this power will be used for selfish ends that will inevitably tend to work against the public interest. From every news medium, as well as from films and television shows, we are bombarded by the argument that corporations lie and deceive because they have an economic interest in doing so–as if governments, by contrast, have a vested interest in telling the truth. A few examples will suffice to demonstrate that this is hardly the case.

WASHINGTON [AP]-Social Security Commissioner Stanford G. Ross said Thursday people must forget “myths” about contributing to their own retirement and recognize the payroll deduction for what it is–a tax to support the elderly, the disabled, and their families. Ross, who is resigning next month, criticized what he said is a widely held belief by the nation’s workers that Social Security benefits are a “a sacrosanct entitlement” earned from “contributions” to the system.

The “myth” that the Social Security levy is a contribution, not a tax, “proved valuable in the early days of the program, but . . . is helping to confuse the debate over Social Security today,” he said.⁶

* * *

Former Food and Drug Administration Commissioner David A. Kessler and former surgeon general C. Everett Koop bowed out of scheduled appearances today before a key House subcommittee studying the proposed tobacco settlement.

The No. 1 reason? They didn’t want to testify under oath. After committee staff members told them to expect to be sworn in, they declined to appear, saying the oath-taking was designed to put them “on some sort of parity” with five tobacco executives who testified in January, according to the pair’s letter to the committee. . . . “We have devoted much of our professional careers to . . . working for the public health. . . . We see no reason for the committee to suggest that our testimony about tobacco now requires that we be . . . treated akin to tobacco executives.” . . . The tobacco executives were sworn in with much fanfare in January; major government witnesses have not been.⁷

This seems to have been a judicious decision on their part. In July 1998, a federal judge vacated the EPA’s 1993 report on the dangers of secondhand smoke, because it was spurious. One courageous newspaper columnist summarized what the EPA did:

1. It started with a conclusion.
2. It cherry-picked the studies it would include in its analysis.
3. When even the cherry-picked studies failed to show a statistically significant correlation [between secondhand smoke and cancer], it changed its methodology from the standard 95 percent to 90 percent.
4. Even by the bogus 90 percent standard, the cherry-picked studies showed only a very small risk.
5. It hid from the public the information that it was supposed to make available.
6. It lied about why it changed the standard.⁸

This was not the first time the EPA violated the 5 percent confidence rule, which is an established statistical principle. EPA studies in support of the claim that 20,000 people die annually from radon gas in their homes used the same tactic. Analysts ran radon exposure studies using the 5 percent rule and found nothing, so they increased the parameter to 10 percent. Suddenly the computers spit back what appeared to be a “nationwide epidemic of radon death,” and the EPA then declared radon to be a major threat.⁹

As these examples of official deceit indicate, bureaucrats can hardly be said not to have a vested interest in maintaining their power and jobs. Much of what they do is done not to actually accomplish anything, but to justify the size of their budgets and keep them from being trimmed when the next fiscal year’s budget is being written. And while consumer boycotts can damage the profitability of capitalist firms, bureaucrats need never worry about having to cater to public demand. They are insulated from criticism. Having been appointed rather than elected, they cannot be directly voted out of office. If anything, “coercion” comes from government bureaus, not corporations.

In the face of all this evidence–much of which is obvious–one cannot help but wonder why so many people see coercion where it does not exist. Part of the answer lies in H. L. Mencken’s adage that Puritanism is the haunting fear that someone, somewhere, may be happy. The counterpart of this is that today’s statists are people who constantly worry that someone, somewhere, is using free will to make a choice. To them, choice is the root of all evil. If they had to concede that human action is freely chosen, the entire structure of their many-faceted argument for socialism or government intervention would collapse. If individuals’ behavior is based on choice, then the freer their choices, the greater the extent to which their utility is maximized, and the better off they are. This leaves little room for a government with any more power than that of the proverbial night watchman: to protect the public safety and leave everything else alone. Only by denying that free choice exists–and implying instead that human action is “coerced” by some “power structure” such as corporations–can one build a rationale for the interventionist nanny-state. But it is not far from philosophical denial of free choice to physical prevention of it–all “for your own good,” of course. We may indeed see the face of coercion to an ever-greater extent, but if it comes, it will be delivered by the state, not the market.

Notes

1. (New York: Norton, 1995), pp. 120-21.
2. Quoted by Richard Pells, Not Like Us (New York: Basic Books, 1997), p. 167.
3. Lester C. Thurow, Building Wealth (New York: Harper, 1999), pp. 25-26.
4. Paul Freiberger and Michael Swaine, Fire in the Valley: The Making of the Personal Computer (New York: McGraw-Hill, 2nd ed., 2000), pp. 324-26. For the complete story, see Douglas K. Smith and Robert C. Alexander, Fumbling the Future: How Xerox Invented, Then Ignored, the First Personal Computer (New York: William Morrow & Co., Inc., 1988).
5. www.faith-and-the-economy.org/Thm4Art-Lasn.htm (a reprint of an article from The Ecologist Magazine, May-June 1999).
6. “Social Security Chief Hits ‘Myth of Entitlement,’” Chicago Tribune, November 30, 1979, Sec. 1, p. 8. (Italics added.)
7. Saundra Torry, “Kessler, Koop Decline to Testify to Congress,” Washington Post, March 5, 1998, p. A-6. (Italics added.)
8. Charley Reese, “It’s A Shame that Americans Can’t Trust Their Own Government.” Orlando Sentinel, July 30, 1998, p. A-12. For a more detailed treatment, see Passive Smoke: The EPA’s Betrayal of Science and Policy by Gio B. Gori and John C. Luik (Vancouver, B.C.: The Fraser Institute, 1999), especially Chapters 4, 5, and 6. The complete text of the judge’s decision is reproduced in the Appendix.
9. Gregg Easterbrook, A Moment on the Earth: The Coming Age of Environmental Optimism (New York: Penguin Books, 1995), p. 246.

Allan Levite is a freelance writer.

For those of you who can’t wait until 2004 to save both money and the environment, there is good news. Those “efficient” environmental washing machines are available right now. They use 25 percent less water and 40 percent less energy. This translates into lower water, gas, and electric utility bills.

Unfortunately, there is a very serious disconnect here. If these new “efficient” washing machines are so wonderful, why does the federal government need to outlaw the primitive, costly, and inefficient old washing machines? If these new washing machines are so fantastic, shouldn’t they be selling like hotcakes at your local department or appliance store? Yes, they should. The problem is . . . they aren’t. They make up less than 10 percent of the new washer sales. This fact should raise a red flag that something is definitely amiss.

Why don’t the consumers like these new “efficient” washing machines that are so strongly endorsed by the federal government and by environmentalists? Well, for starters the washing machine that is advertised to “save” consumers so much money will cost about $241 more than an old-style washing machine. Many would-be customers are also freaked out by the front-loading (as opposed to top-loading) design. This discovery leads to some very down-to-earth questions like: Can children open that front door while the machine is running? Will water go all over the floor if they do open it? If I find a lone sock after the machine has started, can I open the door to throw it in?

There are some other facts that would-be consumers should be aware of (and that the government conveniently fails to disclose). Most of the new washers will use a “tumbler” system where the laundry load rotates as it does in a clothes dryer. While a traditional washer uses gravity as an ally, the new horizontal-axis washing machine must be reinforced to accommodate what is essentially a “dryer filled with water.” This means that the new washers have more parts and are heavier than the old fashioned machines. Translation: The environmental washing machines deplete the world’s “limited natural resources” faster than traditional washers. (That’s certainly not going to make Gaia, the environmentalists’ Earth Goddess, very happy.) What makes the government-approved washer so efficient is that it has eliminated the “agitator,” the critical cleaning component of the traditional washer. With the government washer, you will no longer be able to use ordinary laundry detergent. If you do, watch out for oversudsing. If you use less detergent, it won’t get the clothes clean. To solve this problem you will need to purchase “special” detergent. (“Special” is a euphemism for more expensive.)

Skepticism Called For

Given that our government was less than forthcoming about the problems associated with the environmental toilet, we should be skeptical this time of any government claims relating to “efficient” washers. It is very hard to get the “big savings” promised by former Energy Secretary Bill Richardson if the cost of the product goes up by 59 percent. There would need to be a phenomenal savings in water and energy usage to offset this steep price increase. To achieve any kind of savings (let alone “big savings”), the U.S. Department of Energy (DOE) had to present a very unrealistic scenario in which the government washer is used 392 times a year (or 71⁄2 loads each and every single week) over a period of 14 years.²

There are two major problems with this. According to the Mercatus Center, less than 15 percent of the washers get such heavy use.³ And most of us will not keep our washers as long as the DOE says we will. Because Americans move so frequently, many washers get left behind even though there may be a number of useful years left on the machine. Also, lots of us will decide to buy a new washer (before realizing the “big savings”) when faced with an expensive repair bill.

In fact, maintenance costs for these new machines could be significant. Whenever there is a revolutionary design change in any product, expect problems. It should be noted that there has already been a recall by one of the major washer manufacturers. For the record, the traditional washer made by this same manufacturer was not recalled. If nothing else, the old-style washers are reliable. They have been around for a long time, and they have been improving every year. The government estimate of “big savings” did not even address the likelihood there would be higher maintenance costs associated with the environmental washer.

In calculating the total cost of ownership, the government made two other questionable assumptions. The DOE used an inexplicably low discount rate. According to the Competitive Enterprise Institute, it should have used either an average credit-card or consumer-loan rate. CEI also states that the Energy Department “uses highly problematic forecasts of energy prices extending decades into the future.”⁴ By using a low discount rate and exaggerating energy costs, the government significantly overstates the hypothetical future savings.

With this information, it would appear that very few Americans will reap any savings from this “efficient” washer. In fact, most consumers will actually be monetarily worse off with a government washer. However, the biggest losers will be America’s poor and elderly. For families with annual incomes under $20,000, only 9.8 percent do as many loads as the DOE estimates. But the DOE did not use the same figure for low-income families as it did for the general population. It used an even higher figure of 410 washloads per year instead of the already questionable 392. From the DOE’s perspective, the poor will benefit more than any one else with a government washer.⁵

Among Americans 65 or older, only 11.3 percent do as many washloads as the government estimates. Even with the DOE’s rosy (but unrealistic) scenario, 28 percent of the elderly will actually suffer a net cost increase with the “efficient” washer. Before the government got into the consumer appliance business, many senior citizens, especially those with back trouble, did not like the standard front-loading dryers. They are definitely not enthralled with the idea of now having to contend with a front-loading washer as well. This will certainly come as bad news, but our “Earth First” government is not going to make any exceptions to this mandate. America’s seniors are going to have to bend over for the environment like the rest of us.

The government mistakenly believes (or does its best to convince us) that low operating cost is the most important, if not the only, product criteria of concern to consumers, be it for automobiles or for washing machines. This is clearly not the case. For washing machines, consumers consider reliability and low price to be far more important. As is the case for almost all products, consumers weigh many factors in their purchase decision. In addition to the criteria already mentioned, capacity and ease of use are also important considerations.⁶

Manufacturers’ Complicity

What about the washing machine manufacturers? Aren’t they outraged that the federal government is dictating what they can, and cannot, sell to the public? Ironically, they were a major player in this conspiracy. On May 23, 2000, a cabal composed of appliance manufacturers, energy-efficiency advocates, environmentalists, and the federal government agreed to foist this monstrosity of a washing machine on American consumers, whether we like it or not.

Participants in this landmark government-industry agreement to save the environment included: the Association of Home Appliance Manufacturers, Alliance Laundry Systems, Amana, Asko, Frigidaire, General Electric Appliances, Maytag, Miele, Fisher & Paykel, Whirlpool, and the Department of Energy. Other organizations that supported the agreement included the Natural Resources Defense Council, the American Council for an Energy-Efficient Economy, the Alliance to Save Energy, Northwest Power Planning Council, the City of Austin, Pacific Gas and Electric Company, the Appliance Standards Awareness Project, and the California Energy Commission.⁷

Of all these organizations, which one represented the consumer? After the agreement was made, there was a lot of backslapping from the participants and a flurry of press releases that made some rather extravagant (but fortunately unprovable) claims.

“Today’s announcement is a victory for consumers, manufacturers, and for the environment. The standards announced today will save enough electricity to light 16 million US homes for 25 years, while cutting greenhouse gas emissions by an amount equal to that produced by three million cars every year,” said then-secretary Richardson.

“As a result of the new agreement, consumers nationwide will save nearly 5 quadrillion Btu (British thermal units) of energy and reduce water use by some 10.5 trillion gallons over a 25-year period. That translates into a savings of as much as 18 gallons of water per wash,” chimed in a DOE news release.

“The clothes washer standards that manufacturers have agreed to will reduce hot water use and the total energy consumption associated with clothes washers by about one-third. As a result, consumers will cut their energy, water, and detergent purchases by over $25 billion during the next 30 years,” said Howard Geller, executive director of the American Council for an Energy-Efficient Economy.

“This is a significant victory for the environment. The water savings will reach up to 11 trillion gallons, meaning less water needs to be pumped from America’s aquifers and rivers, and less strain on already overtaxed water and sewer systems,” said Andrew deLaski, executive director of the Appliance Standards Awareness Project.⁸

“Whirlpool endorses this historic agreement that not only represents a significant advancement in energy efficiency, but will also benefit the environment,” said Jeff Fettig, president and COO of Whirlpool Corporation.

The washer manufacturers’ willingness to cut a deal with the government at the expense of the consumer had less to do with altruistic environmental concerns and more to do with crass monetary incentives. By having the government guarantee a market for the more expensive “efficient” washers, the manufacturers can expect a financial windfall. And to sweeten the pot even more, the government will give each manufacturer of those washers a generous tax credit for each machine that is produced.

If the pharmaceutical industry had collectively agreed to restrict consumer choices and to raise prices like the washer manufacturers, the news media, Congress, and consumer-advocate groups would have demanded that the Justice Department initiate antitrust proceedings under the Sherman Act. However, since our government is no longer for the people, but is rather of the environment, by the environment, and for the environment, any activity or collusion to restrict trade, no matter how bizarre or illegal, is condoned so long as it is labeled “Earth-friendly.”

On January 12, 2001, eight months after the washing machine manufacturers, environmentalists, and the federal government agreed to sell out the American consumer, the Department of Energy issued its regulations for “efficient” washers. This was just one of many 11th-hour environmental regulations that were railroaded through the system by the departing Clinton administration. Of these, the “reducing arsenic in the water” regulation received the most media attention. Opposing the “arsenic” regulation made the Bush administration look like it was . . . against the environment. To avoid another public-relations disaster, the Bush administration has apparently decided to minimize future confrontations relating to environmental regulations. This may help explain why the Bush administration approved the efficiency standards for washing machines on April 12, 2001.⁹

Given the government’s success in mandating environmentally friendly toilets and washing machines, it would be safe to assume that it will become even more emboldened to dictate what products we can, and cannot, buy in the future. As it turns out, the government air conditioner, heat pump, water heater, and refrigerator are already in the works. You can bet that these products will not only provide “big savings” for the consumer, but will be great for the environment as well.

As our country continues to move from a market-based economy to one where centralized planning dominates, we can look forward to simplified one-stop shopping at a local government store in the not-too-distant future. Although it will have a very limited selection, all products in the government store will be guaranteed to be good for the environment. Even though the American “Yugo” will be a deathtrap, it will get 50 miles to the gallon. The government stove, dishwasher, and refrigerator will result in more deaths from salmonella and E. coli, but they will definitely provide “big savings” for consumers, that is, if we live long enough.

In the near term, we must accept the fact that this government washing-machine nightmare is not going to go away. So plan to keep your primitive (but reliable and easy to use) washer until the summer of 2003. Then go out and buy the very best primitive washer you can find while it is still legal to do so. Plan to keep it for at least 14 years (the DOE figure) and pray that, in the interim, our government comes to its senses.

Notes

1. James Plummer, “New Washing Machine Rules: Questions and Answers,” Consumer Alert, February 2001.
2. Thomas Bray, “First Toilets, Now Washing Machines,” Detroit News, March 21, 2001.
3. “Majority of Americans Disapprove of Proposed Washing Machine Regulation,” Mercatus Center, December 1, 2000.
4. “Petition for Administrative Reconsideration of Energy Conservation Program for Consumer Products: Clothes Washer Energy Conservation Standards,” Competitive Enterprise Institute, March 13, 2001.
5. “DOE Clothes Washer Addendum—Poll Results,” Mercatus Center, December 4, 2000.
6. “New DOE Proposal A Wash,” Portrait of America, December 1, 2000.
7. “Washing Machines To Become More Energy Efficient,” United States Department of Energy News, May 23, 2000.
8. “More Efficient Washing Machines to Save Consumers More Than $25 Billion,” EarthVision Environmental News, May 24, 2000.
9. Ronald Brownstein, “Bush Steps Lightly With His Agenda After Triggering Clinton Land Mines,” Los Angeles Times, April 23, 2001.

Many people answer yes. Such adjustment assistance sounds reasonable. But a deeper investigation of the issue counsels against it.

Losing a job indeed is harmful, both financially and emotionally. Free trade with foreigners, however, does not uniquely cause job losses. To focus on free trade’s role in eliminating some jobs is to focus on a phenomenon that is inessential.

Suppose Congress eliminates all government-created obstacles to automobile imports. Some U.S. auto workers would lose their jobs as a result. But as a result of what, exactly?

The correct answer is: as a result of consumers’ voluntarily buying more foreign cars than they bought when trade was restricted. These job losses result from consumers’ voluntary choices.

A popular alternative way of explaining these losses is to blame foreigners: “Foreign producers stole these American jobs.” If you don’t think about the matter deeply, you might conclude that foreign producers are indeed the real culprits.

But with free trade, no producer sells anything that consumers don’t wish to purchase. All that any producer does, in a free market, is to make offers to consumers. Ultimate buying decisions rest with the consumers. So blaming producers misses the mark. If you’re looking for the real cause of a worker’s job loss, look to consumers.

Much of the emotional hostility to free trade dissolves when we recognize who causes the job losses when trade is freer. When the ultimate cause of an industry’s sagging fortunes is understood to be voluntary consumer choices, it’s beside the point to fume and thunder against perfidious foreigners. And arguing for relief from the effects of the peaceful choices of fellow citizens is more difficult—although more honest—than arguing for relief from “foreign competition” or from an abstraction labeled “free trade.”

But recognizing that consumers are the ultimate cause of particular job losses does not, by itself, argue against government assistance to those who lose their jobs when foreign trade expands. Proponents of assistance might argue that job losses resulting from consumer choice are no less real and painful. Precisely because free trade makes us wealthier (the argument goes), we as a nation must help those who pay the price for that policy.

One indication of the soundness of an argument is the willingness of its proponents to apply it consistently. If I argue that I can punch your innocent child for my amusement, I should be willing to extend to others the right to amuse themselves by punching my own four-year-old son. It will not do for me to assert, “No, no. The argument justifying my punching your child doesn’t give you the right to punch my son. The reason is that my child is mine. I reserve the right to amuse myself by punching other people’s children, but deny others the right to punch my child.”

Those who argue for government assistance to workers who suffer losses when trade is made freer are guilty of the same sort of inconsistency revealed in the above hypothetical example. Here’s why.

As noted, every job loss “caused” by free trade is caused, ultimately, by consumers voluntarily shifting some of their spending to foreign firms. But anytime consumers shift their spending—whether to purchase more foreign products or to purchase a different mix of domestic products—some workers are made worse off in the short run while others are made better off. Foreign competition plays no unique role in this dynamic, competitive process.

If consumers buy less beer brewed in Wisconsin and buy more wine made in California, do taxpayers owe relief to brewery workers? If Americans choose to spend less on Hollywood movies in order to invest more in IBM stock and U.S. Treasury bonds, should government assist out-of-work actors?

Those who endorse government assistance to workers harmed by freer trade with foreigners should, to be consistent, answer yes to the above questions. After all, the point of such assistance is to relieve the distress of job losses caused by changes in the patterns of economic activity. But few of those who advocate government relief for workers and firms suffering losses from free trade advocate this logical next step—a fact that accurately suggests that the first step is itself unwise.

A principal reason why most people instinctively avoid this next step is the correct understanding that such an attempt would freeze economic activity—and freezing economic activity kills it. If government set about to protect everyone from every economic difficulty caused by changes in the ways that consumers spend money, government would inevitably clamp down on entrepreneurial innovation and consumer freedom. How could it be otherwise? Because every innovation and every change in consumer wants would cost the state money, state officials would never allow entrepreneurs and consumers the freedom to cause government to spend money on economic relief. He who pays the piper does indeed call the tune. Only the state would decide which, if any, economic changes are permitted. Entrepreneurial creativity would be snuffed out and consumers would be stripped of the freedom to spend their money as they choose.

The resulting tyranny and destitution would rival the worst catastrophes perpetrated by Stalin or Mao.

State assistance for workers who lose jobs because of freer trade with foreigners has the virtue only of not immediately opening the door to wholesale government direction of all economic activity. Arguably, only foreign commerce would be frozen by such assistance (a bad-enough outcome, but one far less horrible than a freezing of all commerce). But if we wisely resist policies that entail freezing domestic economic activity, what good reason is there for pursuing a policy that will freeze economic activity in which consumers purchase foreign-made goods and services? None that I can see.

The twentieth century taught us that wholesale government direction of economic affairs inevitably fails. The only distinction between wholesale direction and boutique-sized direction is that the ill effects of the latter are less widespread and, hence, less noticeable than the ill effects of the former—hardly a good reason to tolerate such avoidable consequences.

Greve, executive director of the Center for Individual Rights, sets out first of all to explain the case for federalism, a case few Americans are familiar with. Federalism, he explains, is a means of injecting market competition into politics. “The citizens’ ability to vote with their feet and take their talents and assets elsewhere will discipline government in the same way in which consumer choice, in nonmonopolistic markets, disciplines producers,” Greve writes. As long as people have the right to leave political jurisdictions they find undesirable, states (or smaller government units) have to bear the costs of their mistakes. Organized labor, for example, might want a state to enact compulsory unionism, legislation against plant closings, and a $20 minimum wage, but the state that does so will soon find its economy withering.

The Constitution’s drafters understood the need to maintain such discipline on the states and sought to secure it by creating a central government of strictly enumerated powers. With but a few exceptions, political controversies were not to be decided in Washington, where losers have the choice of living with it or departing the country. Instead, they would be settled at the state or local level—often without government at all.

But just as Jefferson observed that it is the natural order of things for liberty to give way to authority, it also seems to be the natural order of things for federalism to give way to centralization. Those who want to employ coercion would rather fight and win once at the national (or, as is becoming increasingly possible, international) level than fight dozens or hundreds of battles in smaller units where success is less likely and if achieved, less durable. Therefore, they devised a number of arguments to attack federalism, the most successful of which has been the “race to the bottom” argument (“without central control, competition will lead to unacceptably low standards”), which the Supreme Court has latched onto in some cases.

Opponents also have played the typical statist games with language, seeking to redefine federalism so it means what they want it to mean. Greve points out that for decades the Court hid its indifference to congressional aggrandizement by claiming that federalism really means the political process in which the boundaries between federal and state authority are hammered out—“process federalism.” So the Court did not have to do anything but make sure that elections weren’t canceled.

Greve attacks “process federalism” and other phony concepts and forcefully argues that real federalism—hence the title—means that Congress must be kept within the limits of the enumerated powers of the Constitution. But after decades of abject deference to Congress and the executive branch, is there any prospect of the Supreme Court’s moving back toward real federalism?

The last decade has seen several decisions in which the Court did revive the long-dormant idea of federalism. Greve devotes much of the book to an analysis of those decisions, some of which do little more than hint at an inclination not to let Congress enact any piece of legislation it feels like, and some of which seem to presage a revitalization of real, that is, enumerated-powers, federalism. Will the Court continue to move in that direction?

Greve does not predict what will happen in the judicial realm, but seeks to explain how events could unfold to make it possible for a differently constituted Court to bring back the pre-New Deal federalism. The Court, for all its ostensible independence, does keep an eye on the political scene and is leery of making decisions that may kindle political firestorms. The Court, Greve avers, needs to feel that it has political cover before it can return to real federalism. That cover, he believes, can come from a coalition of “Leave-Us-Alone” types who differ greatly as to what they want to be left alone to do, but hold a common hatred of central Big Brotherism.

An intriguing and optimistic book.