02/12/11 I’m the guy who just last week managed to find a plumber who would increase the water pressure in my entire house, defying government controls and thereby causing all appliances to work better. It’s not surprising that this was necessary. Government regulations have made a mess of our daily lives. Whether it is banning effective products or mandating inferior functionality in our appliances and fixtures, government’s role here is indisputably to degrade our quality of life.
So I was stunned to hear President Obama claim exactly the opposite in a speech to the US Chamber of Commerce. He ridiculed those who predicted disaster from government regulations as far back as 1848. “It didn’t happen,” he said. “None of these things came to pass.” Then he went further to say that government regulations “enhanced” industry and “made our lives better.” Regulations “often spark competition and innovation.”
What immediately came to mind is a picture of a race in which some overlord is clamping shackles on the runner’s feet. No, that does not stop the race. The runners develop innovative ways to keep going. Nor does competition stop; it might even become more intense as runners develop new skills they would otherwise not need. All that’s true, and yet we wouldn’t look to this race as the one that is going to set new speed records. Everyone would be better off without shackles.
But Obama’s claim really goes further than saying that somehow industry overcame the costs of regulation. He suggested that we are actually better off than we would otherwise be due to regulations. And he gave the specific example of automatically defrosting freezers. He really did. Here is the statement:
The government set modest targets a couple decades ago to start increasing efficiency over time. They were well thought through; they weren’t radical. Companies competed to hit these markers. And they hit them every time, and then exceeded them. And as a result, a typical fridge now costs half as much and uses a quarter of the energy that it once did – and you don’t have to defrost, chipping at that stuff and then putting the warm water inside the freezer and all that stuff. It saves families and businesses billions of dollars.
Well, this is a precise claim, and it can be checked out. Thanks to many commentators on the Mises Blog and LvMI’s Facebook page, who did some extensive sleuthing, here is what we found.
In 1928, the US Patent Office issued a patent for “defrosting of the cooling element or unit of a refrigerating system.” Still, invention is one thing and marketing and production is another. It took a very long time for these to be seen in real life. More and more patents were issued all throughout the 1920s and 1930s. Most likely, the innovations occurred before this time and would have sped more quickly into the consumer market without the patents, but regardless, an article in Chain Store Age in 1947 writes as follows:
“Auto Defrost,” a recently developed electronic circuit for automatically controlling water defrosting of refrigeration coils has been announced by the Bush Mfg. Co., Hartford [founded 1907], Conn. Advantages claimed for this device are its low price, its ease of installation on existing water defrost systems, and it works independently from the refrigeration system.
Recall that Obama spoke of how the relevant regulations came about “a couple of decades ago.” Well, his timing is off by some 63 years! What’s more, these items were already reaching a retail market by 1948.
A March 13, 1948, edition of the Billboard posted a story datelined from Oakland, California:
Frosted Food O’Mat, Inc., of this city is readying a new ice cream vending machine, designed for grocery stores, super markets, and department stores. Dispenser will be offered both as a coin-operated and a manual device. The vendor will hold up to six flavors, and its makers claim that it has an automatic defroster.
By 1951, these items were already being pushed in homes. An advertisement in Popular Science reads as follows:
Von Schrader Mfg., Co: Amazing Attachment MAKES OLD REFRIGERATORS INTO MODERN Automatic Defrosters! Thirty Million Prospects. Sell without “selling pressure” on sensational Free Trial Plan. Just plug it in and leave it. Frees women from drudgery and mess of defrosting. Saves electricity. Keeps food longer, better. Gives longer life to refrigerator… Women buying by the thousands!
By 1958, it seems like the great innovation was already old news. An advertisement in Life Magazine from 1958, this time from Westinghouse, references a “frost-free, Auto-Defrost Refrigerator” as if it was nearly a standard feature. The main pitch here is that the refrigerator has “cold injector” that chills food faster. It is also styled in the “Shape of Tomorrow.”
Now, this is interesting to me since I can remember problems with freezers in my own lifetime, so it is not automatically crazy to believe that something happened in the regulatory environment of the early 1970s that would have prompted the universalization of frost-free freezers. During this period there began a government push for energy efficiency, and makers were required by government to meet certain targets, just as the president says.
But there is a serious problem. An automatic defroster increases, not decreases, the overall energy use of refrigerators and freezers. As this government report said in 1998: “Refrigerators with automatic defrost have higher occupant consumption (on a label-normalized basis) per unit of occupant activity than refrigerators with manual defrost.”
In other words, the more straightforward way to meet regulations would have been to take defrosting devices out, not put them in! The devices therefore exist not because of standards but in spite of them.
All evidence suggest that the truth is precisely the opposite of what Obama claimed. Frost-free freezers came about in the normal market way. A company found a way to package it as a luxury good available in some markets. Another company saw the advance and emulated it, offering it to still other markets (though the process was likely slowed by the government regulation called the patent). Other companies saw the potential for solving a monstrous household problem and began making them more cheaply and more efficiently, as the target market gradually went from luxury to mainstream. Over time, the improved product was ubiquitous.
This is pretty much the story of every innovation in the history of the world. Whether it is the spinning wheel or the smart phone, private companies innovate in order to outdo their competitors in serving the consumer. They all have reason to become ever more excellent in the service of others. They learn from each other and improve on what exists (in the absence of patents).
It is hard to imagine the alternative scenario that inhabits Obama’s mind. It goes something like this: Private enterprise comes up with a technology that it can fob off on customers and people like it fine but for some maddening problem. Private enterprise doesn’t care. So long as the profits are there, the problems persist. No one in the private sector has reason to change anything. Stasis prevails.
Government regulators, who are constantly scouring around consumer markets to find ways to innovate and improve products, notice the problem and issue some mandate. After some careful deliberation, they march into manufacturing plants with guns:
Listen up: our citizens have a problem with their freezers. They are building up ice. We want you to find a way, some way, to fix this problem. You have until next winter to figure it out. If you do not, you are dead meat.
Industry complies under the gun, scrambling to improve products only because government bureaucrats demand it. Under government edict, enterprise makes the thing, and problems go away. This process is repeated for thing after thing and we are gradually made better off, thanks to the central planners and wise public servants who know better than everyone else. Under this model, the entire developing world might be improved in a matter of months!
This is of course sheer fantasy. So is the claim of Obama that we should be grateful to regulators for all the blessings that flow to us. How many iPhone apps have bureaucrats invented? Will the president’s next claim be that bureaucrats gave us the Wii?
Regards,
Jeffrey Tucker
for The Daily Reckoning
Jeffrey Tucker
Jeffrey Tucker is the publisher and executive editor of Laissez-Faire Books, and the author of Bourbon for Breakfast: Living Outside the Statist Quo and It's a Jetsons World: Private Miracles and Public Crimes, among thousands of articles.
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“Everyone would be better off without shackles.”
You obviously have never lived in a country without regulations, or in which regulations are not enforced (China for one). Every time you buy a product you are taking your life into your hands – it is truly scary. The air is not safe to breathe, the rice has titanium in it, the skim milk powder has melamine.
This “no regulation” diatribe is pure CRAP.
Good Lord man, come to the point!
Do you assume your audience spends 8 hours a day reading Agora conglomerate emails?
What problem did your low water pressure cause with what appliance? And what is the water pressure specified by your local government? And WTF does this have to do with a 1928 patent on defrosting refridgerators (which I know has nothing to do with water pressure).
If your reader does not have a good understanding of the point you are trying to make within 30 seconds you have failed in your attempt at communicating. And most of the information I receive from The Daily Reckoning/Stansberry/Agora fails.
I can’t find any Facebook or Twitter pages for Daily Reckoning (not ShareThis at the bottom of the page). Too long to read…
Tom Friedman proposed the need for regulation of the emerging green technology sector to foster growth. Read it here: http://www.keenforgreen.com/b/green-regulation
Yeah, Bill, because we SO NEED regulations defining how to treat milk spills in the MILK industry because of the oil in milk.
Bill Wilson just like Obama is building a strawman and then knocking it down.
Example like China and Somalia are meant to show how much we need government to save us.
But with just a little thought you see how silly these example are.
China is one of the most centrally planned government controlled places on earth, and he holds it up as wild regulation free market. The truth is that ALL nations who are in the developing stages of industrialization are dirty and many times unsafe.
But the people who live in China are DELIGHTED to go from being dirt poor and starving, to having a a few products that are not BILLs idea of perfectly safe!
These people make me laugh, they believe that government regulations and not wealth and compition is what has given us the incredible lifestyles we lead now.
You would have to have NO understanding of cause and effect to believe such nonsense.
Like the article stated, when and where has government EVER created ANYTHING like cell phones, automobiles, airplanes, electricity, …… ANYTHING????
No, there are simply liars, theives and mostly idiots.
Right now in egypt, while the Bills of the world are huddling waiting for the end of the world, Egyptians are dancing in the street and trying to put thier nation back together from the ‘government” who has been looting and killing for 18 days.
All in an attempt to SERVE the people of Egypt no doubt! You know if it wasnt for the masters what WOULD we all do?
Sheesh, people who believe what Bill belives make me sick.
You clearly interpreted Obama’s comments differently than I did. His point was not that government mandated frost-free refrigerators; they existed long ago. His point was that frost-free refrigerators should use less energy than in 1970. They do now. It is doubtful if they would have without government regulation. Though the fix was simple (a minor change in the heater control) it wouldn’t have happened by itself. Energy use is a pretty small cost still, and energy savings very small indeed. Marketing has a much bigger effect on purchasing decisions. Now, thanks to regulations, we have cheaper refrigerators that also use less energy.
“It is doubtful if they would have without government regulation. Though the fix was simple (a minor change in the heater control) it wouldn’t have happened by itself”
I have NEVER seen a time when free market competitors have not CONSTANTLY striven for any and every advantage they could find. But effecientcy is one of the things they ALWAYS strive for. And marketing departments that will exploit their “most energy efficient model”
Do you not see companies now sell products based on EXACTLY that same “feature” every time you turn on the TV? I sure do.
The government forcing companies to do it a year or two earlier, that does NOT make up for the damage that the regulations cause that are not immediatly or easily seen.
For every forced government action their are other actions that you might not see but still effect us, and they can be serious.
Big corporations LOVE big government regulations? Why? Because it keeps small competitors from being able to compete.
Thousands of rules and regulations require large amounts of staff and paperwork that big companies can easily afford but small startups can not.
And you never know if one of the potential competitors might have come up with the greatest energy efficiency ever, but never got a chance to try.
It is just like bailouts, we see where the money goes to, but we never see where the money MIGHT have gone to, but did’nt
And it is arrogant to believe that YOU or anyone else knows whats best for everyone. Or that YOU know where the future is going, cause you do not.
Government does not even know what is going on now, much less what will happen tomorrow.
Using government force means you don’t care how much harm you might do. It’s do it or die, my way or the highway, that is the essence of government regulation.
And it does far more harm than good.
Period.
Governments should protect the borders and the freedom of their people, period.
For a perfect example of government regulatory stupidity, one only needs to look at the diesel engine.
This simple machine, when operating properly, is clean and efficient, for the most part. It’s worst by-product is carbon, which as we have learned through the whole climate change fiasco, is a harmless, beneficial and even essential component of life.
The governments of the West forced the various engine manufacturers to reduce their pollution output by attaching all kinds of ultimately useless devices to their products. The results were cleaner running engines at the sacrifice of efficiency. They were nice and “green” but they got lousy fuel milage, hence, used more fuel to do less work! Que bono? The oil companies!
Now the EPA and Obama’s minions are wanting to force industry to comply with efficiency standards! Standards that would be easily met if they took all of the anti-pollution crap off of them!
Will this piss off a greenie? No doubt. Here’s my proposal to you, boycott these evil things. Go be a Luddite and see how long you survive without them! Reality has a way of forcing common sense!
According to Bill (http://dailyreckoning.com/governments-struggle-to-stand-still/), government’s role is to protect the elites who control it. And that seems to be a natural bylaw of “zombification.”
This is part of an ongoing effort by this regime to lie about the benefits of government.
Biden tried this a few weeks back, grossly lying to us that:
“Every single great idea that has marked the 21st century, the 20th century and the 19th century has required government vision and government incentive,” he said. “
Sometimes I just wish a meteor would hit earth and get us over with, so I wouldn’t have to hear another moron saying that government regulation “is good for you” or “works for the benefit of the people”. Yep, just like a rapist works for the pleasure of his victim.
Really, some days I’m just tired of humans. Bunch of morons who get what they deserve.
Thats right boys and girls!!!
For too long we listened to these MORONS in silence, trying to just ignore them.
But after a hundred years or more of it we are now on the precipice. Ignoring the idiots has about destroyed us.
Its time to speak up EVERY time some moron makes an idiotic statment like “regulations make us safer” or “government is supposed to look out for the poor”, (the stupid, greedy and moronic is what they really mean.)
Our government was “supposed” to be set up to protect us and our property from the violence of others. It now IS the tool of choice USED by theives both rich and poor to steal from the masses.
Time to stop them out loud every time you hear this crap! Tell them exactly how stupid what they said is, then tell them what TRUE freedom is all about.
Time to stand up and be counted.
Hi JMR
You are the only reckonee around who is brave to table out the ultimate solution.
As in most situation there is good and bad, some truth along with falsehood. Regulations can be valuable to enhance the quality of life there is no doubt and yes they can also be poorly conceived and implemented. I have seen both in my career. Those who wishfully think they would eliminate all government regulations might think twice once they or their loved ones suffered the consequences of unethical practices.
When I hear that tale I think of the cop tasering a civilian or killing someone’s dog in a 4 am no-knock raid or a prosecutor f-ing some guy’s life because it makes him “tough on crime”
There will always be “rules” but the important question is whether these rules are made to serve man or man to serve the rules
There are exceptions to the private is best , but they are fairly rare. The demands of the Royal Navy spurred considerable innovation for a good couple of hundred years for instance. Possibly the only instance.
On a more current theme however I recently bought a second car. It is the same type we bought 5 years ago. Not withstanding my lack of adventure the older car is markedly quicker, and has been known to deliver the advertised 60m/gal.
Unfortunately it apparently creates more CO2 and is taxed at £90/y.
The new one is taxed at £30, is slower and has only ever touch 50m/g once on a fairly sedate motorway run to Scotland. Usually operates at 40-45m/gal.
So. Apparently it is better for the country/world if we use 33% more fuel but apparently create less carbon…..
As even government driven innovation goes that is pretty perverse.
“Like the article stated, when and where has government EVER created ANYTHING like cell phones, automobiles, airplanes, electricity, …… ANYTHING????”
Okay first you argue against obtrusive government, and then you bash them for not creating…products? Now, governments favoring big corporations is a valid point, and governments with bad regulations is also a valid point (companies don’t always have incentives to safeguard against future dangers e.g. oil spill etc).
But WHAT IS CLEAR is that its NOT the government’s job to create products. Accusing them of not doing so turns a valid point into an angst driven rant.
The bigger point is the type of regulation. Not all succeed. Not all fail. Such nuances are not surprisingly always lost in debate.
The Presidential vision – a freezer. Heaven help us.
What *IS* clear is that the current administration, and those from now on, see that it is proper job of government to advance technology, in addition to waging war, spreading wealth and mandating twice-flush toilets and adult-proof pill bottles. Another word for this is fascism…or corporatism, if you blush easily.
(Actually, the government has done an excellent job of building H-bombs, nerve gas, guided missile submarines and land mines, but that’s outside of this argument.)
If our modern climate for litigation, regulation and bureaucratic interference existed 100 years ago, Thomas Edison would have stayed at the telegraph desk, and the Brothers Wright would have said “nuts” and gone home to build derailleur bicycles.
A little regulation is a good thing. But politicos have too much time on their hands. “Nobody is safe while the legislature is in session” -Sam Clemens. Maybe restrict US congress to 30days a year. Many state legislature do that. Cut their pay, close the cafeteria, turn off the heat/ac in the Capitol the rest of the year. Save $$!
if simply looking at africa isn’t enough to make you scratch your head and mumble under your beard ‘hey, maybe there’s something to be said for having a strong government after all’ then at least stop lying to yourself about being all ‘objective’ and stuff, and admit, not to me but to yourself, that you are as much guided by ideology as you accuse the other side of being.
@not_harry
well, i guess you have a point about wright and edison. current copy-right law would make it far more costly for either of them to steal other people’s inventions.
both were successful industrialists, both actively suppressed any patent that would harm their respective business-interests (using lots of money and fiercely badmouthing the competition).
so i take it your point is: ‘if you are rich you are always right, if you start out poor it’s okay for the rich to steal from you and keep you poor’. sorry dude, but this is the 21th century, not the 19th, and i’m happy to report your ideology appears to be ever so slowly getting out of fashion.
Thousands of rules and regulations require large amounts of staff and paperwork that big companies can easily afford but small startups can not. There will always be “rules” but the important question is whether these rules are made to serve man or man to serve the rules.