Fiat Lux

All is somewhat brighter in the US this holiday season, though perhaps not in the sense Father Mohr and Franz Gruber originally intended. At the last minute, Congress (in its infinite wisdom) postponed the 100-watt light bulb ban set to take effect January 1, 2012—a one-year reprieve, not a full reversal, but a welcome one, in my opinion.

Don’t get me wrong—I’m all for reducing my monthly electric bill (as most folks probably are), and there’s little arguing LED and fluorescent light bulbs (for example) are generally more efficient. I have few quibbles with innovations improving efficiency—a big factor in continually improving living standards. (Just ask the North Koreans.)

Second, given these kinds of bulbs last much longer than incandescent bulbs, folks likely need to purchase fewer of them. Meaning eventually we need fewer light bulbs produced per capita, which in turn could mean production and labor at light bulb factories could shift to other, newer uses. That’s creative destruction at its finest, and as a free-market capitalist, I’m a big fan.

But the trouble comes when the government takes the choice of what kind of light bulbs consumers can purchase out of their hands. After all, the “newer” lightbulbs meant to replace your standard 100-watt incandescents (like those squiggly fluorescents) are pricier. Sure, they last longer and are more efficient, but why not let consumers decide how that price breakdown impacts them? What’s more, currently, there’s a decided difference in light quality. My guess is consumers can be trusted to decide for themselves whether they prefer flourescent or incandescent light and whether the energy savings accompanying flourescents are worth the trade-off for what many may consider less appealing light.

Here’s a possibility: Over time, as countless consumers make that decision untold times, one product could win out. If incandescent lights truly carry so many negative externalities (that’s economist-speak for “downside”), over time, you’d expect to see demand drop and prices rise. Which in turn makes them likely even more unappealing than fluorescents, and ultimately hands fluorescent producers a majority of market share. There’s also always the chance technology improves to the point where the quality of light shed by fluorescent bulbs is considered equally preferable, thereby sealing the deal and ensuring the incandescent bulb’s demise.

Or, heck, another possibility—Maybe, just maybe, the world can support demand for two kinds of lightbulbs. Enough demand for both! Coke hasn’t driven Pepsi out of business yet. Cashmere’s existence hasn’t made lambs’ wool obsolete. Plus, a lightbulb isn’t a major capital outlay. We’re talking about something that costs about $2 versus $4 per bulb.

Which brings up perhaps the key point: The government’s involvement in this decision is befuddling at best. For one thing, government has a less-than-stellar record when it comes to choosing the market’s winners and losers (*ahem, Solyndra). Then, too, just when the government thinks it’s outsmarted the masses, markets have an uncanny ability to keep the upper hand. Consider the EU’s recently upheld carbon tax on airlines—which has prompted some impacted businesses to consider alternate routes to avoid paying as much of the tax as they can. And ironically, that could very well lead to higher carbon emissions from longer routes, not lower. Clearly not ideal, but hey, when government attempts to manipulate markets, from what I’ve seen, markets typically outsmart governments.

Nevertheless, for now, folks can safely bask in the warm glow of incandescent lights—if that’s their preference—while popping the champagne. And if not, they can head to the local hardware store for some squiggly bulbs. The beauty of free markets—a true gift to us all. Happy New Year, and Fiat Lux!