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: Crony Capitalism

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.

—————————

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”

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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Snopes Misses Larger Story on Sales of Post Offices by California Sen. Feinstein’s Husband’s Company

When George Miller, writing for the Ventura County Tea Party on May 22nd, complained about the blatant conflict of interest that appeared in the report that California Senator Dianne Feinstein’s husband, Richard Blum, was in charge of selling off, on an exclusive basis, some 50 post office buildings belonging to the US Postal Service, he didn’t know that Snopes had already

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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 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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Tariffs are Taxes, Plain and Simple

English: Solar panel installation at an inform...

Solar panel installation (Photo credit: Wikipedia)

Mark Perry is another of my favorite economists. He took an announcement from the Commerce Department, and made corrections to it so that the rest of us can understand what’s really going on:

The Commerce Department issued its final ruling Wednesday in a long-simmering trade dispute with China, imposing tariffs (taxes on American consumers and solar-installation companies) ranging from about 24 to nearly 36 percent on most solar panels imported from (China, in order to protect domestic producers from foreign competition.)

The penalties (on American consumers) are somewhat lower than those announced by the department earlier this year, when the government determined that Chinese companies (American consumers) were benefiting from unfair government subsidies (from Chinese citizens) and were selling their (benefiting from purchasing Chinese products) in the United States below the cost of production, a practice known as dumping  (giving American consumers a great deal.)

Perry uses a clever technique to illustrate what’s really going on. When tariffs are raised, the alleged advantages are

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New Obama Campaign Slogan Reveals Communist Ties

For ?

For ? (Photo credit: Paul Wicks)

This article from the Washington Times just confirms what I and many other writers and researchers have confirmed: not only is Obama a confirmed socialist and communist, but he is determined to continue to promote his ideology in full view. His advisers, in other words, don’t care who knows – the path ahead is “forward”:

The Obama campaign apparently didn’t look backwards into history when selecting  its new campaign slogan, “Forward” — a word with a long and rich association with European Marxism.

Victor Morton, the WT writer, didn’t have to look very far to prove the point. He went to Wikipedia:

Wikipedia has an entire section called “Forward (generic name of socialist  publications).”

“The name Forward carries a special meaning in socialist political terminology. It has been frequently used as a name for socialist, communist and  other left-wing newspapers and publications,” the online encyclopedia  explains.

The slogan “Forward!” reflected the conviction of European Marxists and  radicals that their movements reflected the march of history, which would move  forward past capitalism and into socialism and communism.

That’s an interesting way of phrasing it: “move forward past capitalism.” Actually Obama intends to destroy capitalism and replace it with the form of socialism called

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Charles Koch: Covert Libertarian No Longer

A statement for the Koch Brothers at the Occup...

A statement for the Koch Brothers at the Occupy Wall Street protests. (Photo credit: Caroline Schiff Photography)

In Jane Mayer’s expose of Charles Koch, the billionaire conservative running Koch Industries in Wichita, Kansas, she made it sound as if she were shedding the light on Koch’s political activities for the very first time. Titled “Covert Operations,” Mayer noted that the growth of Koch Industries since Charles and his brother David took over its operations after the death of their father, Fred Koch, in 1967, has made each of them multi-billionaires—somewhere in the neighborhood of $25 billion each. Koch Industries operates oil refineries in Alaska, Texas, and Minnesota, 4,000 miles of pipeline, along with Brawny paper towels, Dixie cups, Georgia-Pacific lumber, Stainmaster carpets, the spandex product Lycra and generates an estimated $100 billion a year in revenues.

But the real lowdown, according to Mayer, is how they are investing their wealth:

The Kochs are longtime libertarians who believe in drastically lower personal and corporate taxes, minimal social services for the needy, and much less oversight of industry—especially environmental regulation.

And they are doing it with a flourish. Mayer quotes Charles Lewis, the founder of the Center for Public Integrity—calling it a “non-partisan watchdog group” which in fact is funded by internationalist socialist George Soros’ Open Society Foundation and the Ford Foundation, among others, to “reveal abuses of power, corruption and dereliction of duty by powerful public and private institutions…”—as saying:

The Kochs are on a whole different level. There’s no one else who has spent this much money. The sheer dimension of it is what sets them apart…

Charles Koch’s efforts are based on both the short-run—determined to keep President Obama a one-term president and turn control of the Senate back to the Republicans, as well as the long-run—by

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The Free Market versus Government

Michael Barone: Booming North Dakota City Shows Wisdom of Markets

So Fremont is the site of the gleaming headquarters of Solyndra, the solar panel firm promoted by an Obama megacontributor, which got a $535 million loan guarantee from Obama’s stimulus package.

But the wave of the future turned out to be a stagnant puddle. Solyndra went bankrupt. Meanwhile, Fremont, like most of coastal California, has had continual outmigration to other states and has grown only due to immigrants. It grew only 6 percent between 2000 and 2011.

If the Obama folks back in 2009 thought Fremont was the harbinger of America’s future, one wonders what thoughts they had, if any, about Williston, N.D.

English: President Barack Obama examines a sol...

English: President Barack Obama examines a solar panel with Solyndra CEO Chris Gronet (right) and Executive Vice President Ben Bierman, during a tour of Solyndra. (Photo credit: Wikipedia)

You can be sure that Obama’s minions had no thoughts whatsoever about Williston. They live in a dream world where with sufficient quantities of other peoples’ money—or money created by the Fed—will solve all problems, including that elusive problem of pollution and global warming and clean green energy and…so forth.

I’ve written before about the miracle in North Dakota, as have many others. And I continue to watch the miracle unfold and ripple out to other oil shale fields across the country. The free market technologies and profit-seeking entrepreneurs are putting the US into the enviable position of becoming energy independent. What an amazing paradigm shift from just ten years ago when North Dakota was the least-visited state by tourists!

As Michael Barone wrote:

This tale of two cities has a moral, which is that no political or governmental leader can forecast the future. Barack Obama and his Nobel-Prize-winning energy secretary thought solar panels were a huge growth industry. They bet billions of [our] tax dollars and lost.

True, many private investors guessed no better. But they were risking their own money, not ours. And, yes, government research provided some early help in developing fracking.

But Fremont and Williston are more evidence, if any is needed, that the collective decisions of participants in economic markets do a better job of allocating resources than the often contributor-driven decisions of a few politicians.

Amen. Take it to the bank. The free market always…always…works better than government experts.

Only Tax Cuts Can Stop Trillion-Dollar Deficits

President Kennedy delivers radio and televisio...

The U.S. Treasury Department announced on Thursday that the federal government’s deficit for the first nine months of its 2012 fiscal year exceeded $900 billion and that the country is on target for another $1 trillion annual deficit for the fourth year in a row. And this was despite the fact that revenues for the same period actually increased by five percent.

In simple terms, government is growing more quickly than the economy can generate the revenues to feed it. And if the status remains quo, the economy will continue to stagnate. At present it is informally in recession, there is gridlock in Congress, elections are four months away, and Taxmageddon—the “fiscal cliff”—awaits taxpayers on January 1. All of this is sufficient to cause even the hardy to tremble.

What the president and a compliant Congress have managed to do over the last four years is to increase government spending, compared with what the economy generates—the gross domestic product, or GDP—to the highest level since WWII. James Glassman’s study of deficit spending under the last five presidents shows that President Obama’s ratio of deficit to GDP is 8.9 percent, compared to George Bush senior’s 4.2 percent, Ronald Reagan’s 4.2 percent, George Bush junior’s 2.7 percent, and Bill Clinton’s 0.5 percent. Putting that into perspective, Obama’s deficits are running between two and fifteen times greater than his predecessors, with no end in sight.

In fact, if the economy’s output declines as many economists are predicting, revenues will fall, resulting in even higher

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Geithner Ignores Subpoena to Testify in Lehman Bros. Case

Secretary of State Hillary Clinton and Treasur...

The creditors’ committee representing what’s left of Lehman Brothers asked bankruptcy Judge James Peck last week to force Timothy Geithner—currently Obama’s Treasury Secretary but President of the New York Fed at the time of the Lehman Brothers’ bankruptcy—to answer some questions. The original subpoena issued by the committee to Geithner to appear last August was ignored and so the committee appealed to Judge Peck.

The committee claims that Geithner played a pivotal role in Lehman’s collapse and may have “unique” knowledge about a last-minute transfer of some $8 billion out of Lehman to JPMorgan just before that collapse. Lehman is suing JPMorgan in an attempt to get that money back and Geithner’s testimony is crucial. Time is running out: The discovery period for the committee ends on March 16.

The committee claims that JPMorgan did a “last-second collateral grab” in order to save itself while inflicting fatal damage on Lehman at the same time. And Geithner was in on it. The week before the Lehman collapse Geithner made 35 phone calls to Lehman’s CEO Richard Fuld and another 10 calls to JPMorgan’s CEO Jamie Dimon, and at least some of those calls, said the committee, centered on those collateral demands. Therefore, the committee insists that Geithner should be required to reveal what those calls involved.

Geithner has remained silent; however, a spokesman for the Treasury Department, Anthony Coley, said he couldn’t understand what all the fuss is about: “Treasury and the Fed have provided

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WikiLeaks: More Evidence of Monsanto’s Bullying and Influence-Buying

Struktur des Monsanto-Katalysators

The latest revelations from WikiLeaks confirm Monsanto’s continuing efforts to influence governments worldwide to rule in its favor and punish those who won’t.

A cable written in 2007 and released recently by WikiLeaks confirmed the company’s important influence at the very highest levels of the U.S. government. Authored by Craig Stapleton, a friend and business partner of then-president George Bush, the cable outlined a response to resistance from various members of the European Union to adopting GM (genetically modified) crops. At issue specifically was France’s move to ban Monsanto’s GM corn variety:

Country team Paris [Stapleton’s code name] recommends that we calibrate a target retaliation list that causes some pain across the EU since this [resistance] is a collective responsibility, but that also focuses in part on the worst culprits. [Emphasis added.]

The list should be measured rather than vicious and must be sustainable over the long term, since we should not expect an early victory. Moving to retaliation will make clear that the current path [of resistance to the adoption of GM crops] has real costs to EU interests and could help strengthen European pro-biotech [pro-GM] voices.

Other leaked cables documented attempts to influence the Pope himself, who was resistant to

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Whirlpool Asks for Mercantilism, Forces Consumers to Pay More

Whirlpool Corporation

One of the ways that Whirlpool Corporation celebrated its 100th anniversary last year was to file petitions against two of its main South Korean competitors for “dumping” washing machines onto the market on Black Friday. Whirlpool claimed that Samsung was selling their 3.7 cubic-foot top-loading washing machines at a wholesale price of $363.18, way below the $751.46 Whirlpool says it would cost them to make the same product. Consequently, Samsung and LG Electronics sold thousands of their washers over the Black Friday weekend, taking substantial market share away from Whirlpool.

In its complaint, Whirlpool demanded an investigation into their rivals’ practice of “dumping” washers at prices that Whirlpool couldn’t match, and then demanded sanctions—tariffs—against the offending competitors and their products.

It’s worked before. Last March Whirlpool filed a similar petition about their competitors dumping high-end refrigerators and the Commerce Department agreed, applying a 37-percent duty on

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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.

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