{"id":19895,"date":"2013-04-17T08:47:00","date_gmt":"2013-04-17T13:47:00","guid":{"rendered":"http:\/\/quotulatiousness.ca\/blog\/?p=19895"},"modified":"2013-04-17T08:47:00","modified_gmt":"2013-04-17T13:47:00","slug":"new-frontier-in-crony-capitalism-public-policy-profiteering","status":"publish","type":"post","link":"https:\/\/quotulatiousness.ca\/blog\/2013\/04\/17\/new-frontier-in-crony-capitalism-public-policy-profiteering\/","title":{"rendered":"New frontier in crony capitalism &#8211; public-policy profiteering"},"content":{"rendered":"<p><a href=\"http:\/\/washingtonexaminer.com\/the-light-bulb-law-was-a-matter-of-public-policy-profiteering\/article\/2526884\" target=\"_blank\">Timothy Carney<\/a> explains why the big companies that made ordinary incandescent lightbulbs were among the groups pushing to make those lightbulbs effectively illegal. It&#8217;s a classic case of using government power to reduce competition and increase profit margins for certain companies:<\/p>\n<blockquote><p>Absent barriers to entry, light-bulb profit margins had to stay low. GE could make superior bulbs \u2014 soft white, etc. \u2014 but people are only willing to pay so much of a premium for those. After all, we\u2019re dealing with <em>light<\/em> here, which is kind of a commodity.<\/p>\n<p>So, where to find barriers to entry? Maybe higher-tech bulbs? LEDs, CFLs, or other bulbs that offer longer life and greater efficiency. GE, Osram, and Sylvania jumped into  those high-tech bulbs, got some patents. R&#038;D expenses, higher manufacturing costs, proprietary information \u2014 these created barriers to entry and allowed heftier profit margins.<\/p>\n<p>But what if you made a super-efficient long-life bulb \u2014 and nobody wanted it? What if you couldn\u2019t convince consumers that these bulbs were <em>good for them?<\/em> Well, that\u2019s when you thank your lucky stars that you are GE, with the largest lobbying budget of any company in America.<\/p>\n<p>You \u201cheavily back\u201d legislation that will \u201ceffectively outlaw \u2026 the traditional incandescent light bulb.\u201d Now all consumers are forced to play in the world where you have greater barriers to entry, and thus bigger profit margins.<\/p>\n<p>The negative consequences here aren\u2019t mere Tea Party concerns about \u201ccrony capitalism\u201d or, say, freedom of choice. One cost is the erosion of competition. GE in this case has found a way to divorce profit from the delivery of <em>value<\/em> \u2013 and I call it <em>public-policy profiteering<\/em>.<\/p>\n<p>Sure, these high-tech bulbs have value. But I think consumers, rather than politicians, should be the ones who determine what value they assign to energy efficiency and longevity. So, through government intervention, capitalism starts to resemble the Marxist caricature of capitalism \u2014 Big Businesses making profits while denying consumers what they want.<\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>Timothy Carney explains why the big companies that made ordinary incandescent lightbulbs were among the groups pushing to make those lightbulbs effectively illegal. It&#8217;s a classic case of using government power to reduce competition and increase profit margins for certain companies: Absent barriers to entry, light-bulb profit margins had to stay low. GE could make [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[831,25,84,15],"tags":[484,727,469,661,513],"class_list":["post-19895","post","type-post","status-publish","format-standard","hentry","category-business","category-economics","category-government","category-technology","tag-competition","tag-cronycapitalism","tag-monopolies","tag-regulation","tag-research"],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p2hpV6-5aT","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/19895","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/comments?post=19895"}],"version-history":[{"count":1,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/19895\/revisions"}],"predecessor-version":[{"id":19896,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/posts\/19895\/revisions\/19896"}],"wp:attachment":[{"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/media?parent=19895"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/categories?post=19895"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/quotulatiousness.ca\/blog\/wp-json\/wp\/v2\/tags?post=19895"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}