Most consumers have never heard of “creative destruction.” But they still benefit from it—at least, they do when it isn’t forced on them. Popularized by Austrian economist Joseph Schumpeter, creative destruction is an economic theory that says the short-and long-term benefits of entrepreneurial activity and competition far outweigh the short-term losses caused by a new product replacing an old one.
Audiotape makers, for example, may lose their jobs to the makers of compact discs, who may lose their jobs to the digital age. When it occurs organically, it’s a beautiful process that begets economic progress and benefits the consumer. When forced on businesses and consumers by our government, however, it does far more harm than good. And that’s exactly what’s occurring with the federally mandated incandescent light bulb ban.
In 2007, Congress passed an energy bill that placed stringent efficiency requirements on incandescent bulbs in an attempt to phase them out beginning in 2012 and replace them with more expensive but more energy-efficient bulbs, the most popular being compact fluorescent bulbs (CFLs).
Politicians used a distorted view of creative destruction mixed with global warming concerns to sell the regulation. They said it will create jobs, save consumers money and reduce greenhouse gas emissions. But what’s really happened?
Politicians, as they typically do, fail to see the unintended consequences of their legislative agendas. When it comes to CFLs, the exposure to mercury vapor is dangerous if the bulbs are broken. Hospitals and medical charities warn that CFL bulbs cause migraines and epilepsy attacks. Critics also point out that CFLs do not work well in colder temperatures, they emit less heat and thus will force Americans to use more heat. CFLs do not work well with dimmer switches and the life span of the bulb diminishes when turned off and on frequently.
The latest attack is on jobs. General Electric is closing its major incandescent factory in Winchester, Va.—a factory that employed 200 people. And the jobs that likely will be replacing those will be in China, where the United States gets much of its CFL bulbs because the process of making CFLs is labor-intensive and labor in China is much cheaper than it is here.
As Rep. Marsha Blackburn, RTenn., said, “Washington banned a perfectly good product and fired hardworking Americans based on little more than their own whim and the silly notion that they know better than the American consumer. Now, hundreds more Americans are looking for work while assembly lines in China are churning out fluorescent bulbs for the U. S. market.”
To be clear, this is not Schumpeter’s model of creative destruction; it’s economic ignorance. If consumers really wanted to buy fluorescents rather than cheaper incandescent light bulbs, they would purchase them without a government ban. And if China produced those fluorescents, cheap imports mean businesses will find better productive uses for U. S. labor.
While this is likely true with or without a mandate, the difference is that the government’s ban unnecessarily kills jobs. In this case, a mix of special- interest politics and concern that energy use in the United States is producing too much greenhouse gas emissions resulted in needless mandates. Rather than an innovation valued in the marketplace, consumers are forced to accept a product they don’t want.
The attack on the incandescent bulb is just one in a laundry list of government regulations attempting to promote conservation. Energy efficiency standards for vehicles, appliances and buildings all have unintended consequences that the advocates for the regulations fail to foresee, including increased energy use. In every single case, if consumers want a product, the market is capable of providing it.
When the government picks winners and losers, it reduces the incentive for companies to innovate. It also increases the incentive for companies to lobby the government for special handouts and protections. When the government creates mandates and regulations, it purposely narrows the path businesses can take. They are policies that distort normal market forces and encourage government dependence. Other countries have adopted similar incandescent phase-out strategies. But that isn’t cause for the United States to be a lemming for bad policy.
Nick Loris is a researcher at The Heritage Foundation.
First moved on the McClatchy News Wire service