If Only Market Participants Knew What Was Good for Them

One of the strangest claims of today’s environmentalists is that “green” technology is actually highly productive and efficient, so that by switching to environmentally friendly production methods, firms can increase their profits, and by adopting energy efficient practices at home, consumers can save money. Obama’s plan to outlaw incandescent light bulbs, for example, is being pitched in terms of efficiency and thrift:

“I know light bulbs may not seem sexy, but this simple action holds enormous promise because 7 percent of all the energy consumed in America is used to light our homes and businesses,” the president said, standing alongside Energy Secretary Steven Chu at the White House.

Obama said the new efficiency standards he was announcing for lamps would result in substantial savings between 2012 and 2042, saving consumers up to $4 billion annually, conserving enough energy to power every U.S. home for 10 months, reducing emissions equal to the amount produced by 166 million cars a year, and eliminating the need for as many as 14 coal-fired power plants.

In other words, consumers can save up to $4 billion annually by switching to the kinds of bulbs the President likes (presumably the ugly knotty ones that produce that creepy shade of bluish-white), but consumers are too foolish to do this on their own. Likewise, firms can reap substantial rewards by producing and marketing these über-bulbs, but are too shortsighted to make the necessary investments without a government mandate.

As a marketing strategy, I understand perfectly the government’s and the Green’s approach here. If market participants had a good idea of the true costs and benefits of such policies, they would reject them out of hand. Better to persuade consumers that expensive environmental mandates are really money-saving devices. But, of course, this is logically inconsistent, absent some kind of subtle and complex “market failure” argument. Nothing stops firms from adopting efficient technologies and consumers from switching to lower-cost products. Indeed, that is exactly what they do on the free market. If you have to force them to switch, it’s hard to make the case that the switch is really in their best interest, absent crass paternalism. Oh, I forgot, this really is all about crass paternalism.

Peter G. Klein is a Research Fellow, Associate Editor of The Independent Review, and Member of the Board of Advisors of the Center on Culture and Civil Society at the Independent Institute.
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