Los Angeles
CHANGE MY LOCATION
Mark Newgent
Baltimore History ExaminerMark Newgent is a writer and editor with a talent for breathing history into everyday happenings.
Examiner Feeds
These websites were picked by the Baltimore History Examiner as useful resources.Baltimore Examiners
Neal Shaffer
Baltimore Sports Examiner
Most Recent Post
Is your team an Obama, a McCain, or an Other?
Baltimore Sports Examiner
Most Recent Post
Is your team an Obama, a McCain, or an Other?
Regulate This!
Add a Comment
by Mark Newgent, Baltimore History Examiner
History and contemporary political and policy issues intersect quite often. In my other life in the blogosphere, I write for Red Maryland the “premier blog of conservative and Republican politics and ideas in the Free State.” There my compatriots and I take part in the great debates of the day regarding Maryland and national politics.
The big hot button issue in Maryland politics lately is regulation, especially as it relates to the environment and electricity markets. Who isn’t feeling the pinch with increasing BGE rates and gas prices?
Government regulation is a bugaboo of mine. I have written three Op/Ed pieces for the Examiner about these two related subjects. I wrote about the dangers of Governor O’Malley’s global warming bill, the mythical “consensus” on global warming oops I mean climate change, and the false salvation of California’s energy regulation policies.
My background and training in history definitely informs my views on current political and policy issues, in fact it has been invaluable tool of analysis for me. So let me put on my historians cap for a moment to talk about our past experiences with government regulation.
I generally take a dim view of government regulation. Regulation usually ends up causing the very problems it is intended to solve. The popular conception of regulation as government reigning in greedy corporations belies the truth about it. In reality, Big Business and Big Government love each other. The relationship is mutually beneficial. Big business uses big government to eliminate competition and get from government what it can’t get competitively in the free market. Meanwhile big government gets its taste for setting up the arrangement. Government regulation merely invites the big boys of the corporate world in to write the rules and buy off politicians.
National Review’s Jonah Goldberg points out a historical example for us:
According to civics textbooks, Upton Sinclair and his fellow muckrakers unleashed populist rage against the cruel excesses of the meatpacking industry, and as a result, Teddy Roosevelt and his fellow Progressives boldly reined in an industry run amok. The problem is that it’s totally untrue, a fact Sinclair freely acknowledged. “The Federal inspection of meat was, historically, established at the packers’ request,” Sinclair wrote in 1906. “It is maintained and paid for by the people of the United States for the benefit of the packers.”
Or, as historian Gabriel Kolko writes, “The reality of the matter, of course, is that the big packers were warm friends of regulation, especially when it primarily affected their innumerable small competitors”….
Or, as historian Gabriel Kolko writes, “The reality of the matter, of course, is that the big packers were warm friends of regulation, especially when it primarily affected their innumerable small competitors”….
Meanwhile, small firms and butchers who’d earned the trust of consumers would be forced to endure onerous compliance costs, while large firms not only could absorb those costs more easily but also claim their products were superior to uncertified meats. This story played itself out repeatedly during the Progressive Era. Big Steel actually sought out government regulation because it feared free-market competition. During the New Deal, FDR supposedly carried on his (distant) cousin Teddy’s crusade against the “malefactors of great wealth.” But the truth is that big business often welcomed government regulation. Clarence Darrow, surveying the National Recovery Act’s record, found that the keystone agency of the New Deal had served only to help big business.
We see the same process playing itself out in our own time.
General Electric, Phillips, and Sylvania wrote the energy bill, recently passed by Congress and signed by President Bush, which outlaws the incandescent light bulb. Who are the largest manufacturers of the twisty CFC bulb? You guessed it, GE, Phillips and Sylvania. Who is going to buy a more expensive light bulb if they can buy a cheaper bulb, if not forced to do so my government fiat? GE, with its largest lobbying army in Washington, is pushing hard for increased mandates for solar and wind energy. GE is the heavily invested in wind and solar energy. GE bought up its renewable energy interests from Enron after it went belly-up in 2001. Enron lobbied both the Bush and Clinton administrations to pressure the Senate to ratify the Kyoto Protocols so it could take advantage of the renewable mandates. GE owns NBC, which heavily promoted Live Earth and flogs the global warming issue daily. What does that tell you?
General Electric, Phillips, and Sylvania wrote the energy bill, recently passed by Congress and signed by President Bush, which outlaws the incandescent light bulb. Who are the largest manufacturers of the twisty CFC bulb? You guessed it, GE, Phillips and Sylvania. Who is going to buy a more expensive light bulb if they can buy a cheaper bulb, if not forced to do so my government fiat? GE, with its largest lobbying army in Washington, is pushing hard for increased mandates for solar and wind energy. GE is the heavily invested in wind and solar energy. GE bought up its renewable energy interests from Enron after it went belly-up in 2001. Enron lobbied both the Bush and Clinton administrations to pressure the Senate to ratify the Kyoto Protocols so it could take advantage of the renewable mandates. GE owns NBC, which heavily promoted Live Earth and flogs the global warming issue daily. What does that tell you?
What about the subsidies that went to ethanol peddlers like Goldman Sachs and Archer Daniels Midland, which are now responsible for the current food shortages? Lobbyists for the pharmaceutical industry wrote the legislation for the Medicare prescription drug benefit.
We can all agree that Maryland’s 1999 “deregulation” of its electricity markets was bad law and bad policy. However, was it really “deregulation?” How can you have true deregulation with price caps and a system, which created individual monopolies or fiefdoms for BGE, PEPCO, et al? That isn’t deregulation; it is merely another form of regulation. You can’t impose price caps, which outside competitors can’t afford then expect them to enter the state electricity market, or any market for that matter. The new providers would be at a severe competitive disadvantage, and they were, which is why no serious competition emerged. Maryland’s 1999 “deregulation” was nothing of the sort. It was merely a restructuring of the regulatory relationship between the power companies and the state, not true deregulation.
I know electricity market differ greatly from other markets in terms of their complexity, and I understand all the calls for “re-regulation” of Constellation and BGE. However, we should tread carefully on any path of re-regulation, because as I argued above, regulation invites the big boys in to write the legislation, buy off politicians. I agree on the need for some basic rules of fair play and government’s need to enforce them. However, we need let companies sink or swim on their own merits, without the taxpayers or ratepayers footing the bill for regulatory schemes that ensure they are “too big to fail.”
“Re-regulation” won’t necessarily lead to lower rates for consumers, what it will do however, is ensure that big government will join big business to pick winners and losers. They win we lose.
Topics: BGE , regulation , muckrakers
Subscribe
FeedComments
More from Baltimore History Examiner
The myth of Herbert Hoover and the Great Depression.
Topics: The New Deal , FDR , Great Depression , Herbert Hoover
Why we fight
Topics: 9/11
History Made
Topics: Barack Obama
Obama the heir to JFK? Not so much.
Topics: Obama , JFK
"Trying to reason with hurricane season*"
Topics: Chesapeake-Potomac Hurricane of 1933
Julia Child: Chef, American Spy
Topics: Julia Child , OSS
"Prompt and Utter Destruction"
Topics: World War II , Hiroshima , Nagasaki , Downfall
Aleksandr Isayevich Solzhenitsyn
Topics: Aleksandr Solzhenitsyn
The KGB's Source at the Baltimore Sun
Topics: Baltimore Sun , KGB
