Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Tag Archives: Capitalism

President Proposes Doubling the tax Subsidy for the Poor

President Obama’s proposal to double the earned income tax credit (EITC) for the working poor on March 4 came with all the attendant benefits such an expansion would provide: it would reduce poverty while encouraging people not working to get a job. It would expand the existing law to cover an additional 16 million families with 30 million children.

In his State of the Union Address in January, the president warned this was coming,

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Of Myopia and Markets

The enforced elimination of the traditional incandescent light bulb by Congress has been used repeatedly by several commentators as a classic example of crony capitalism at work. They missed the most important point: the free market has provided alternatives that are largely neutralizing the state’s mandates.

The story began with efforts by companies like GE, Sylvania, and Phillips conspiring with green environmental groups to pressure Congress into banning incandescents so that consumers would be forced to purchase more efficient but more expensive and higher profit alternatives that they make, such as LED (light emitting diode) bulbs, halogens, and CFLs (compact fluorescent lights – those with the curly tops).

They didn’t really want or need an outright ban, just a mandate that bulbs would have to be slightly more efficient – just enough more so that the present ubiquitous invention by Edison wouldn’t be able to meet it. And the mandate was staged in so the consumer wouldn’t squirm too much at having his alternatives eliminated and being forced to pay more for those that remained. On January 1st the final step – banning 40s, 60s, and 75s – took place.

The New York Times got into the act, surprisingly, pointing out that Phillips – the huge Dutch conglomerate that makes LEDs – formed a “coalition” (the Times’ word) with a number of environmental groups also seeking limits on incandescents (among other things), including the Natural Resources Defense Council (NRDC). Said the head of Phillips’ “strategic sustainability initiatives,” Harry Verhaar:

We felt that we needed to make a call and show that the best-known lighting technology, the incandescent light bulb, is at the end of its lifetime.

In that single phrase, the hubris and crony-capitalist mentality is on full display: we know better than consumers do about what’s best for them. We get to decide where the market is headed. We need to “make the call.” Besides, we have the latest technology to replace the incandescents. Sure, they’ll cost more, but think of the savings! And we could sure use a boost to our bottom line, but that’s only an afterthought. Besides, we tried to persuade the consuming public that Edison’s invention is inefficient and expensive to operate and that our new, more expensive technology is really going to save them big bucks over time. But they just don’t listen. They keep buying incandescents, and we keep having to make do with the tiniest of profit margins. So we really were forced to hook up with those greens to get the job done.

The math certainly is persuasive: a 60-watt light bulb costs, for example, around $2 or so, but burns up more than $7 of electricity every year and only lasts a year and a half under normal usage before burning out, whereas an LED, which costs $13, burns just $1.57 of electricity in a year, and lasts more than five years. Think of the savings!

Unfortunately, the consumer doesn’t care. He doesn’t care that most of the energy used in incandescents is turned to heat, not light. He doesn’t care that they last only between 750 hours and 2,000 hours. And so, three quarters of the four billion light bulb sockets in the US are still filled, and being refilled, with incandescents. Something had to be done!

The lobbying efforts began in earnest, with many politicians “caving” after learning that the industry backed the mandates, and if they think it’s good, then why not? It was a classic case of “bootleggers and Baptists” coming together to present an irresistible case to waffling moderates in the House and Senate. Congressman Fred Upton said he supported the bill because it couldn’t be that bad “if the industry supported it.” Congressman Steny Hoyer said he voted for it because “the standards are supported by the lightbulb industry.”

Those efforts birthed the Energy Independence and Security Act of 2007, a mess of pottage designed allegedly “to move the United States toward greater energy independence and security … to increase the efficiency of products [like light bulbs]….” Of course, government can do no such thing, only the free market can do that. But no matter: the bill passed the House 264-163 and the Senate 65-27, and George Bush, the great environmentalist, signed it into law in December, 2007.

The new law wasn’t just at attack on light bulbs, but affected vehicle fuel economy and technology, increased biofuel production, enforced appliance efficiency, required federal buildings to use Energy Star products, and so on.

But it also was filled with loopholes – just the thing that the free market loves to explore to create options, alternatives, and workarounds so that consumers can obtain what they really want after all. The law didn’t apply to appliance light bulbs, “rough service” light bulbs, colored Christmas tree lights, plant lights, 3-way lights, stage lighting, candelabra lights, outdoor post lights, and nightlights as well as any bulbs less than 40 watts or more than 100.

Entrepreneurs went to work. A company called Advanced Lighting Technologies recently announced is “2X Bulb” which appears identical to Edison’s invention, but which would have made him envious: it’s twice as efficient as the 2007 law demands, and is available at prices marginally higher than those disappearing from the shelves.

The market is also putting pressure on CFLs, partly because people don’t like them (they contain mercury, they don’t handle dimmer switches well, and they don’t last as long as advertised), and partly because the prices of LED lights are dropping. The irony is clear: the market, in its wisdom, is replacing the replacements!

The market is also providing alternative sources for those consumers who still want to buy incandescent light bulbs in the familiar wattages. They are available, in any quantity, on eBay and at 1000Bulbs.com. When last checked, they were going for under a dollar, and much less in quantity. Just the thing for preppers and stockpilers.

So the lesson from the incandescent light bulb isn’t the crony capitalist one. It’s the one that the free market teaches every time. It will somehow, some way, find a way to satisfy the consumer.

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Sources:

Economist Mark Perry: Crony capitalism: How private industry used government force to kill the traditional light bulb for higher profits

The Washington Examiner: Industry, not environmentalists, killed traditional bulbs

The New York Times: Bulb In, Bulb Out

Phase out of the incandescent light bulb

The 2007 Energy Act

The math: The incandescent light bulb isn’t dead

Incandescent Light Bulbs for sale on eBay

Standard Light Bulbs for sale at 1000bulbs.com

Reason: Lights Out For America’s Favorite Light Bulb

Rasmussen Reports: 72% Don’t Want Feds Changing Their Light Bulbs

2X technology explained

CNN’s obituary: RIP, light bulb

The story behind “Bootleggers and Baptists”

Annoucements of the death of the Incandescent Light Bulb are Premature

Midst celebrations welcoming the New Year, commentators were also announcing the death of the ubiquitous light bulb – the incandescent variety – that the Congress, in a fit of environmental overreach, banned in stages with legislation passed in 2007. For instance, Shawn Regan, writing at Reason magazine, called it “Lights Out for America’s Favorite Light Bulb” while CNN wrote an obituary for it, adding that it was

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Kickstarter Marks Another Milestone

Just over a week ago Kickstarter, the crowd funding platform, revealed that it had successfully funded more than 50,000 projects since its inception in 2009. As of October 31st that number had jumped to 50,844 with another 4,130 currently being funded.

Kickstarter has helped entrepreneurs with ideas, songs, gadgets, video games, publishing concepts and fashion design ideas connect with low-budget capitalists interested in supporting them. And, thanks to provisions in the JOBS Act, signed into law in April 2012, they can do this without

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More Americans Say Country is Headed in the Wrong Direction

Last week’s poll from Bloomberg show that 68 percent of Americans – two out of every three – say that the country is heading in the wrong direction, the most in two years and a substantial increase just since the first of the year. In addition, it appears that more Americans are blaming President Obama as the cause,

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Warren Buffett’s Railroad is Testing Natural Gas to Drive its Locomotives

The quiet revolution going on in the energy sector as a result of fracking is being punctuated by changes unseen and unappreciated, such as the recent announcement by Warren Buffett’s railroad, BNSF Railway.  The largest railroad in the country, BNSF is testing the use of liquefied natural gas (LNG) to

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Friday’s Jobs Report: There’s Good News, and then…

On the surface Friday’s jobs report from the Bureau of Labor Statistics (BLS) wasn’t so bad: 169,000 jobs were created in August and the unemployment rate dropped slightly, once again, to 7.3%. This was slightly below expectations (180,000) but about in line with the average monthly gains over the past year.

But – and it’s a big but – not everyone is participating, and some of those numbers

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CNBC says Larry Summers to replace Ben Bernanke at the Fed

Citing an unnamed source from “Team Obama”, CNBC announced that Larry Summers will be named head of the Federal Reserve by President Obama to replace outgoing chairman Ben Bernanke whose term expires on December 31st.

Despite much media conversation about other potential candidates for the position, chief among them Fed Vice Chairman Janet Yellen, Summers always had the inside track. Summers served as

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Once Reviled, Capitalism is Making an Extraordinary Comeback Worldwide

This article originally appeared at McAlvany Intelligence Advisor

 

Hidden inside an obscure study just released by Barclays is a nugget of huge importance that reflects a sea change in the growth of entrepreneurial capitalism. The results of this development could equal if not exceed those of the

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42 House Republicans Propose Ending “Obama phone” Subsidy

When Rep. Tim Griffin (R-Ark.), the sponsor of legislation to end the Lifeline mobile-phone subsidy for the poor, noted that “It’s not fair that people save and work and pay for phones from whatever funds they have, and other people get them for free,” he also said that

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The Modern German Economic Model is a Myth – revised and updated

Dessau, a small and steadily shrinking town in the German state of Saxony-Anhalt in what used to be East Germany, is doing the best it can. Ten years after the fall of the Berlin Wall the anticipated “miracle” enjoyed by West Germany following World War II failed to materialize for Dessau and so it is in the process of demolishing some 10,000 empty homes and

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The Modern German Economic Model is a Myth

Dessau, a small and steadily shrinking town in the German state of Saxony-Anhalt in what used to be East Germany, is doing the best it can. Ten years after the fall of the Berlin Wall the anticipated “miracle” enjoyed by West Germany following World War II failed to materialize for Dessau and so it is in the process of

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A very smart guy reviews Stockman’s massive new book

Whenever someone as smart as David Stockman (President Reagan’s Director of the Office of Management and Budget) writes a 768-page book (The Great Deformation), it makes me nervous, for two reasons: I don’t have the time to read 768 pages, but if I don’t I might miss something important. So I was gratified that

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Our Anti-Capitalist-in-Chief has another brilliant idea

If I were a socialist and was the president (but I repeat myself) and was looking around for money to fund wasteful schemes that benefits my friends and discourages capital accumulation, where would I look? How about

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The Profound Unfairness of Raising Taxes on the Rich

Benjamin Anderson tells the story of how a wealthy entrepreneur reacted to the imposition of much higher income tax rates in 1935 at the bottom of the Great Recession. Anderson’s Economics and the Public Welfare, a highly regarded study of the Great Depression, was based on his personal experience as an economist for the Chase Manhattan Bank and the editor of the Chase Economic Bulletin. Anderson recounts the case of one rich man who,

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Davos’ Theme of “Resilient Dynamism” Hides Real Agenda

The World Economic Forum (WEF) in Davos, Switzerland, opened on Wednesday with the theme “Resilient Dynamism” and an agenda that is the polar opposite. That theme, promoted by the WEF’s founder, Klaus Schwab, began with an accurate assessment of how the push for global government is increasingly being resisted, and

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Obama reveals his agenda, again

An average soul perusing the headlines from yesterday would most likely miss Obama’s use of words to indicate where he wants to take us. Listen to what he said about the negotiations over the fiscal cliff:

Everybody’s got to give a little bit in a sensible  way. We move forward  together, or we don’t move forward at all.

Uh huh. We have to “move forward.” What’s that all about?

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The Story Behind Black Friday

Black Friday shoppers at Walmart

Black Friday shoppers at Walmart (Photo credit: Wikipedia)

As usual, there’s more to the story than meets the eye. Retailers discovered the benefits of promoting Christmas shopping earlier and earlier, pushing Franklin D. to move Thanksgiving Day back a week:

Before 1930s: Unwritten Rules

In the early 1900s it was an unwritten rule that no retail store would promote Christmas items until after Thanksgiving. (Wow, can you imagine?) Instead of holiday sales in October, companies would spend lots of money on parades the day after Thanksgiving.

You can still see evidences of these parades today in the Macy’s Day Parade and others. Retail stores would sponsor giant parades the day after Thanksgiving and you could bet that one of the final floats in the parade would include Santa Claus, reminding all people to buy their Christmas gifts from the sponsoring store.

But then an interesting concept began to emerge: today we call it “crony capitalism.” It’s the conjunction of interests of some/many in the private sector seeing the advantages of

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The Impact of the Technology Explosion

Compaq Lunchbox Computer

Compaq Lunchbox Computer (Photo credit: Accretion Disc)

Mark Perry brings it, again. He compares the costs (in dollars and, more importantly, in hours of labor) of buying computer technology in 1984 and that same technology today. It’s astonishing what he has discovered:

Measured in time worked, the average American in 2012 would only have to work about 27 hours (about 3.5 days) at the average wage today of $19.79 to purchase [an] HP laptop and [a] SanDisk flash drive, compared to the five months of work in 1984 to purchase the “cutting edge” portable computer and external disk drive of that era.

Today’s laptop is 6 times lighter and 62,500 times faster than the 1984 portable computer, while today’s flash drives store thousands of times more data than the external drives in 1984.

Let’s consider that again: three and one-half days’ worth of labor to purchase today what five months of labor would buy in 1984, but we’re buying much more horsepower today for that three and one-half days!

Perry says that we’re not surprised because the improvement didn’t happen overnight, it happened over the last 29 years, so we become immune to it, and even expect it. Why not? Why not wait until the iPhone 5 comes out? It’ll be a quantum jump ahead of the iPhone 4. We expect it.

And there’s the impact on our

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What Liberties are We Actually Losing?

Washington DC - West Potomac Park: Thomas Jeff...

Washington DC – West Potomac Park: Thomas Jefferson Memorial (Photo credit: wallyg)

Russ Roberts received an interesting email that asks some important questions about the freedom fight:

You guys have been forecasting the arrival of universal serfdom for about as long as the left has been predicting the collapse of capitalism. Is the Road to Serfdom gridlocked? Did someone forget to gas the car? Has our dashboard GPS unit failed? Or our we just moving really slowly, the better to take in the scenery?

I mean, come on. I’m guessing that you, the readers of this blog are among the freest people in human history. You are free to go pretty much anywhere in the world you wish to go, free to buy pretty much anything that’s available for sale anywhere, free to think anything you want, say anything you want, read anything you want, watch anything you want on TV. And even after you’ve paid for all those dinners in nice restaurants, vacations in nice places, and homes in nice subdivisions, you still have enough left over to own shares of Apple or Google. You’re paying less in taxes than you have in decades. If you get really sick, or suffer a serious injury, you will receive top quality medical care than will not leave you penniless even though you might never be able to pay the full cost of your care yourself– thanks largely to the pre-eminently socialist institution known as “insurance.” And even if you’ve not made or saved lot of money in your lifetime, you will not be destitute in your old age, and you will not be allowed to die like a dog in the street. And so on.

Maybe I’ve missed something. But an itemized list of liberties of which you have been deprived, or that you are at risk of losing, might help me get up to speed.

What might such an “itemized list of liberties” look like if you got an email like this? Or if a skeptic asked you face-to-face?

Roberts fumbles around with

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.