Businesses and Regulation

I sometimes here supporters of a certain regulation say "even big company X supports this regulation, so it must be a good idea."  But this is based on a faulty assumption, similar to that made by people who equate being pro-business in politics with being pro-free markets.  They are not the same thing.  As was said at the Cato blog:

Representatives of the business community frequently are the worst
enemies of freedom. They often seek special subsidies and handouts, and
commonly conspire with politicians to thwart competition (conveniently,
they want competition among their suppliers, just not for their own
products). Fortunately, most business organizations still tend to be -
on balance - supporters of limited government. But as the Wall Street Journal notes, some state and local chambers of commerce have become relentless enemies of good policy.

Incumbents of major industries very often shape regulation to their advantage, and to the disadvantage of consumers and smaller or new competitors.  For example, as one of the larger companies in my business, many of the regulations and restrictions I rail against in this blog actually help my business.  Licensing requirements, bonding requirements, insurance requirements, regulatory and reporting requirements, etc.  all tend to make it nearly impossible for new companies to enter the business to compete against me, and give a distinct advantage to the larger incumbent players.   I still vehemently oppose all that garbage, but I do so as a defender of capitalism and against what are probably the best interests of my company.

So when large companies like GE say that they are now on the global warming bandwagon and support government intervention in CO2 emissions and such, it is not an indicator that CO2 science is any good; it just means GE has decided that likely CO2 legislation will help its bottom line.  While GE is portrayed as someone who will get hurt by CO2 regulation but is reluctantly coming around to the science anyway, what it in fact really means is that GE has decided that global warming regulation can be shaped to its advantage, particularly if it can use its size and political muscle molding the details of that regulation.  Here is a great example, via Tom Nelson (the Instapundit of global warming skepticism)

But there is sure to be strong opposition to the bill, including from General Electric Co.

light bulb maker is developing a new generation of efficient
incandescent bulbs, said Kim Freeman, a GE spokeswoman in Louisville,

By 2012, she said, GE will have an incandescent bulb that uses as little energy as the compact fluorescent bulbs sold today.

would oppose any legislation that would ban a particular technology,"
she said. "Giving consumers more choices is the appropriate approach."

company supports the standards passed by Congress in December,
according to Freeman. That law requires bulbs to be 25 percent to 30
percent more efficient starting in 2012.

Read between the lines, and you see GE attempting to steer global warming legislation to its advantage.   The last paragraph goes a long way to explaining GE's support of the last energy bill (with substantial light bulb legislation), which GE might have been expected to oppose.  Because now we see that GE has a product sitting on the shelf ready for release that fits perfectly with the new mandate.  Assuming competitors don't have such a technology yet, the energy bill is then NOT a regulation of GE's product that they reluctantly bow to, but a mandate that allows GE to keep doing business but trashes their competition.  It is a market share acquisition law for GE.  On the other hand, GE says a total ban would be bad, because it would force CF bulbs to the forefront, where GE trails its competitors.  This is the cynical calculus of rent-seeking through regulation.  And it is all worthless, because high efficiency bulbs are one of the things that so clearly pay for themselves that consumers will make the switch for themselves without government mandates.


  1. Bearster:

    Consumers may pay a premium for a more efficient bulb. If a standard bulb is $1 and an efficient one is $1.50 but it saves $1 per year in electricity, it makes sense and most people will do it. But if the efficient one is $12, few would.

    Also, if quality goes down (for example a cold blue light, or 30 seconds of flickering and dim useless light before the bulb turns on, then it's not worth it to save a buck a year in electricity).

  2. markm:

    GE would also be a likely beneficiary of any regulations that caused power generation and transmission equipment to be replaced earlier - probably with much larger sales and higher profit margins than are involved in light bulb sales.

  3. Bob Smith:

    But high-efficiency bulbs don't pay for themselves. They're too expensive. It's normal, of course, for environmental moonbats to tout operating costs while ignoring capital costs. They also ignore how the bulbs actually work: you can't pop into your bedroom for 10 seconds and pick up your keys when a CFL needs 30s to warm up (plus it uses a lot of power during that warmup).

  4. charleywhiskey:

    There are no small CFL spotlights or floodlights because the light source is so much larger than an incandescent bulb that it cannot be efficiently focused. Thus it wastes a considerable amount of light in many applications by illuminating areas where light is not needed or wanted.

  5. charleywhiskey:

    There are no small CFL spotlights or floodlights because the light source is so much larger than an incandescent bulb that it cannot be efficiently focused. Thus it wastes a considerable amount of light in many applications by illuminating areas where light is not needed or wanted.

  6. Mike:

    GE has a lot to gain from CO2 legislation. I was listening to a talk show, and a caller called and told a story that he had watched a program on the History Channel on man made Climate Change. Yeah, it was a program about the *future* on the History Channel.

    The radio host suggested that the reason the History Channel broadcast such a program had to do with who owned the network. The History Channel is a subsidiary of MSNBC. MSNBC is owned by GE. So it would make sense, that anything owned by GE would be influenced by the higher ups in GE.

    Visit GE's website. There you will see their commitment to the development and manufacture of high efficiency gas turbines. Wind turbines. Photovoltaics. Just mouse over "Innovation" and look for yourself.

    I bought shares of GE a few years ago, before this Climate Change thing really got going. I'm going to keep those shares. While I am not your investment adviser, I personally believe that companies that invest in man made Climate Change stand to make a lot of money because of legislation. :-(