The recent American history of federal energy regulation includes three major Congressional acts: the Energy Policy Acts of 1992, 2003, and 2005, three acts that run 393, 1,237, and 550 pages, respectively. The 1992 act has 3,021 sections. The 2003 act has 1,611 sections, and the 2005 act has 1,840 sections. Long laws make bad laws; and bad laws are not simply the worst form of tyranny, they are tyranny.
What is in these acts of Congress? Ordinary people do not know. We do not know. We have only the vaguest of ideas. Most of us do not even know that such laws have been passed much less their contents. This ignorance means that Americans do not govern themselves. We follow orders. And then we are taken advantage of in ways we are not even aware of. Sure, every so often we make a statement as in the 2006 elections. Even abject slaves occasionally speak out against their masters before being whipped back into line.
A few of us know the portion of these laws that pertains to our businesses, but we know little else. A few members of Congress and a few lobbyists know more. Some trade associations, some business firms, some environmentalist organizations, and some bureaucrats in the departments of our octopus state know more too. What do they know? They know the parts of the whole that apply to them. No one grasps the full content and implication of these highly detailed regulatory directives. No one knows all of what such laws mean now and in the future for the people whose activities they control.
Special interests run the show
An act of Congress like these energy statutes is a complex item because today’s markets are complex. In an economy such as ours, those who attempt to control and deflect markets and human actions to their own narrow ends must necessarily devise convoluted and complex statutes. One thing leads to and is connected with another. When Congress tries to dominate the free-flowing decisions of millions of Americans, it produces massive laws. When Congress tries to favor one group over another, it produces both complex laws and massive injustice.
America’s energy laws are not the kinds of laws that govern traditional human relations. These laws are not about crimes, damages, accidents, land boundaries, and contract disputes. These are laws that tyrannize the general public while benefitting special interests. They are not really laws in the traditional sense of being sanctioned by God or even by man’s conscience. They are decrees or edicts.
How do we get such laws? Start with a compliant people. Add a Congress receptive to special interests. Mix in members of Congress with their own whims and interests who are running amok. Add in a state that knows no boundaries or limits. Lubricate with money and politics. And the result? Laws that are the cancerous statutes of a complex and multiple tyranny.
Behind the curtains of Congress, enough people understand enough to get what they want. There do exist rooms, smoke-filled or not, in which lobbyists, industry representatives, legislative assistants, and politicians carefully select the wording of each sentence and paragraph that will destroy the free market and replace it with its unscrupulous substitute. Man-made laws are not random events.
Whoever these underhanded people are that build our laws, we can be sure that each and every section of the law has a purpose that serves them and not us. Someone somewhere is the winner, while many others of us are the losers. The winners vary: members of various industries, members of Congress, members of educational establishments, lawyers, government employees, bureaucrats, unions, trade associations, etc. The losers vary: the public, unwary companies, foreign companies, state governments, the poor, the less fortunate, etc. The picture is fluid and changing. One group wins at one time and then loses at another time.
In the long run, the state is the big winner. Its power augments. Its control over industries and people augments.
We the trusting
We the people are not meant to understand how we are being fleeced. That is obvious. But even worse, the legislative system is so arranged that the resulting complexity and incomprehensibility are made to seem necessary. We are made to think that the system is beyond our control and understanding; it is supposed to be something that we simply have to accept as part of the natural order of things. And we are led to believe that we cannot question this order and that this order is essential to our well-being. We are supposed to believe that anything else but such laws would bring disaster upon us. And surely if we question the process or the system by which such laws are manufactured, then we are made out to be subversive of the sacred democratic order. Not only are we to be fleeced, we are made to believe that no other way of life is possible or else we will be even worse off.
We are made to fear rocking the boat. We are made to fear losing what we have and drowning. Meanwhile we are slowly being submerged anyway. We are participating in our own suicide.
Mostly we trust the lawmakers. Surely, we assume, they must know what they are doing. Surely, we assume, they are doing their jobs to look out for us. We cannot bring ourselves to believe that they would deceive us, that they would systematically pass laws that feather the nests of a few of us while robbing most of us. But this is precisely what the business of Congress is, and it has been that way since the first Congress met in 1789. Congress deceives and robs, robs and deceives.
The paradox of tyranny is that it extends itself by changing the political and social order while indoctrinating us that any attempt to overthrow or radically revise the existing order of tyranny will bring chaos and suffering upon our heads. In the name of order and freedom, we are made to feel we must remain passive. Meanwhile, as we remain passive, we lose that order and freedom we think we are preserving. Step by step, we find ourselves in support of a process of tyranny being extended by degrees.
We the people know nothing of what laws like the energy laws say or mean. We know nothing. We are on the receiving end. We merely ratify the tyranny by voting for our representatives. We are the know-nothings, the ignoramuses, the rubes who support a carnival with fewer and fewer attractions and rides. Our duty, we are made to feel, is to take pride in being part of the democratic process of the greatest and most free country on earth. We are supposed to vote and affirm this process. Isn’t this what is drummed into schoolchildren whose rebelliousness fades with their conditioning and aging hormones? But in fact these acts of Congress are the magnificent and grand output of American democracy approaching its apogee. We have a glut of laws. They are sickness and rot.
America beyond the expiration date
Where is the expiration date on this carton? Where is the expiration code on this bottling up of free markets? Aren’t the contents of these packages stale, moldy, and rotten? Who wants to pay the clerk for such a decrepit system as ours? Who wants to continue ingesting tyranny made in corporate boardrooms, trade association conventions, and legislative chambers?
The legislative process is out-of-date, an Enlightenment device that is way past its prime. Once thought to restrain kingly power, parliaments and legislatures are past due; and we are paying exorbitant penalties that are compounding at a rapid rate. If the outmoded and outdated package is wrapped in new paper, a change of faces in Washington, will the contents be any less rancid when we open it? If we spray the outside of the bottle with Lysol, will the spoiled milk inside become more palatable?
The American system is grown into an implacable tyranny. The Iraq War is a symptom of an underlying despoliation of American rights. The contents of the inner package have been stripped of their preservatives and left to molder. They are deteriorating before our eyes as the date stamp for liberty recedes further and further into the past. Before long, when the smell overpowers us, we shall have to bury the corpse.
Hold your nose
How far into any of these laws do we have to read before we run into the stench of special interests? Not far. I make no effort to read these laws in their entirety or to choose the most noxious sections. I merely scroll down a small fraction of the long list. In the 2005 law, millions upon millions of dollars will go to a university with comprehensive departments (engineering, architecture, computer science, urban design, etc.) to study how to build more energy efficient buildings. Would it be asking too much for builders to fund such research? Would it be asking too much for them to decide whether such research would pay off and should be funded? Or how much it should be funded? Or how to do the research? As we watch new buildings rise, we will hear about the wonders of the free market while being blithely unaware that no such free market exists.
Cement or concrete is to be phased out in federal projects. It is to be replaced by "recovered mineral component." What is that? That is blast furnace slag (excluding lead slag), fly ash from burning coal, silica fume, and any other solid waste that the government designates. A 30-month study will be conducted, urged on by 10 industry groups and several cement manufacturers. The industry groups include the Slag Cement Association, the Steel Recycling Institute, the American Coal Council, and the Utility Solid Waste Activities Group. Perhaps slag cement is as superior as it’s advertised to be. This I do not know. But if it is, then why not let it win its battles in a free market? Why must it be forced into use with secretive provisions that most of us know nothing about?
Certain energy agencies are instructed to favor biodiesel or hybrid engine technologies when they buy vehicles, the goal being energy efficiency. The lawyers in Congress have already decided what is cost-effective and what is not. The National Biodiesel Board that represents the biodiesel industry says that it "is currently tracking more than 160 pieces of biodiesel legislation at the state level. The bills include incentives, use requirements, point of taxation clarification, authorization of studies, state fleet use requirements, biodiesel promotion, and others." The individual states of this nation share the Congressional disease. Meanwhile Congress has enacted tax breaks for biodiesel and other of its favorites.
How ridiculous can a law of Congress get? Should a federal law have to contain such language as this? "The term u2018F34T12 lamp’ (also known as a u2018F40T12/ES lamp’) means a nominal 34 watt tubular fluorescent lamp that is 48 inches in length and 11/2 inches in diameter, and conforms to ANSI standard C78.81—2003 (Data Sheet 7881—ANSI—1006—1)."
The 1975 Energy Policy and Conservation Act required manufacturers to certify that their motors met the applicable standard. The 1992 energy law dictated the energy efficiency of motors, but the language was ambiguous concerning general purpose, special purpose, and definite purpose motors. Five years later the Department of Energy clarified the matter by a ruling. Then arose uncertainties regarding the motor test standards to be used to measure compliance to the law. When these were thought to be ironed out using industry standards, up to 20 percent of the motors seemed to fail the tests. The government was slow to accredit testing labs to understand why this had happened. Conflicts arose over the methods used to carry out testing, and the tests mattered a great deal because the law is specific. The difference between 85 percent and 85.1 percent efficiency might mean a motor is unacceptable. Each stage of a multi-level test of a motor involves a degree of inaccuracy. Even the rounding errors accumulate and lead to large variations in tests. Then came the issue of sampling of a large batch of motors. Some manufacturers began to reclassify their motors so as to avoid the precision of the law. In 2002, which is 27 years after the initial law was passed, the Department of Energy issued a rule that delayed the certification date until June of that year because "there was insufficient independent testing laboratory capacity for testing the thousands of basic models of electric motors covered by EPCA’s efficiency standards."
There is more, very much more. There are issues when it comes to motors manufactured in Canada or elsewhere. There are reporting requirements. There are issues of motor definition and as to which motors are regulated. Meanwhile the states of our glorious Union have taken it upon themselves to begin their own regulation of electric bikes, mopeds, scooters, etc. The U.S. is of course not the only state in the world that regulates electric motors.
I do not know who the winners in the motor episode are other than the state itself. I am sure most of us are the losers who have to pay in higher prices and in the confusions sown in these markets that deter the natural course of development and innovation.
Our civilization runs on energy and electrical energy is everywhere. Because it is regulating energy, Congress must regulate electricity use. And this implies regulating a vast number of products. For this reason, we find energy laws that define lamps, ballast, battery chargers, commercial prerinse spray valves, dehumidifiers, distribution transformers, external power supply, illuminated exit signs, refrigerated bottled or canned vending machines, pedestrian modules, portable electric lamps, unit heaters, ceiling fans, etc., etc.
And, as in the case of electric motors, every one of these devices is to pass certain test standards. Which manufacturers want which standards so as to keep competing brands, domestic and foreign, off the market? Which unions want to keep foreign products off the market? Which manufacturers want to freeze standards so that they will not have to invest and keep up with competition?
What incredible grief is brought on by such laws! What an incredible waste of energy! The compliance costs alone outweigh any supposed energy savings. And we can be confident that society will experience no energy savings from these laws anyway. We can be certain of net losses in welfare. With Congress bypassing and disrupting free markets while subsidizing its chosen favorites such as ethanol, we can be sure that society is getting net losses in energy and welfare compared with Congress doing nothing at all.
What Congress should do is free up all energy sources and allow them to compete on a level playing field. It is unethical and immoral for Congress to accede to special interest groups, be they ethanol, slag cement, or biodiesel. There are members of Congress who may not favor industry interests but who favor particular environmental policies for other personal reasons. But it is equally unethical and immoral that these Congressmen even possess the power to impose their personal preferences on the whole of society.
What we should be thinking about is how to dissolve this system of government and replace it with stripped-down and just self-government. We should be thinking about what laws are just that we might live under in a more decentralized way of life. We should be thinking about how to end the federal stranglehold over this vast nation.
The question of Washington is not a question of dispatching a few bodies from its marbled halls. It is a question of polishing off the system itself and getting back to basics. Such an incredibly overbearing, detailed, ruinous, suffocating, and unjust system as ours is gone. It is gone the way of all such baroque legal systems. It has self-destructed and brought on its own ruin. It has reached too far, lied too much, and shorn itself of any justifications except power. It has brought itself down. It has fallen by its own iniquities. The federal and state governments have collapsed under the weight of their own vast illegitimacy.
We are left to learn the lessons from the failed American experiment. We are left to prepare for a peaceful transition to the next phase of American life. That phase is renewal, ethical renewal. The time to prepare ourselves for it is now. The time is short.
Michael S. Rozeff [send him mail] is the Louis M. Jacobs Professor of Finance at University at Buffalo.