Which product industries are overpriced

Economic policy forum

Mushrooms, pears, bathtubs

, Economic freedom, July 11, 2009

Saarbrücken wants to ban the patio heaters. They have been history in five inner city districts of Berlin since January 1st and in Nuremberg since the beginning of 2008. Further bans are being discussed, including in Hanover and Munich. The days of the conventional light bulb are numbered across Europe - by 2012 it will have disappeared from stores. Power-guzzling refrigerators, washing machines and televisions follow. The argument for the bans is always the same: The energy saving potential is enormous. Werner van Bebber wrote particularly pointedly about the patio heaters in the Tagesspiegel as early as 2007 (October 28) that they were "senseless, annoying creatures of a product industry aimed at convenience and obesity". Patio heaters and lightbulbs have lost their reputation as climate killers. The use of energy is categorized into “good” and “bad”.

According to the European Union, every household saves between 25 and 50 euros in electricity costs every year by switching to energy-saving lamps - including the higher acquisition costs for energy-saving lamps. However, the ban on conventional pears is not the way to make optimal use of energy. If energy-saving lamps are only switched on for a short time, their energy consumption is higher than that of conventional bulbs. The responsible consumer could minimize the energy costs without the ban by, for example, Use a conventional energy-saving lamp in the bathroom and an energy-saving lamp in the living room.

When running for 36 hours a week, a patio heater produces roughly as much carbon dioxide as a car that does 20,000 km a year. For example, Roland Prejawa argues for the Bündnis 90 / Die Grünen parliamentary group (Topic of the Month January 2009, District Council Assembly Charlottenburg-Wilmersdorf, Berlin) that an hour-long operation of a patio heater “roughly corresponds to the ecological balance of a 25-kilometer journey in a small car. Pointless, superfluous and expensive for the restaurateur. A patio heater consumes a gas bottle in 8 hours at a price of 15 euros. With four gas bottles that is 60 euros per day. With 31 days it is 1860 euros per month. That is usually more than renting the shop including heating costs ”. Environmentalists think the pavement heating is insane. Indeed, many restaurateurs might welcome a ban on patio heaters because it costs money. However, patio heaters are a competitive argument. The beer is getting more expensive, the ambience nicer. Mediterranean offers in spring or late autumn. Ultimately, the customers decide which combination of price and ambience they prefer. Competition stimulates business. It is obvious that some of the innkeepers would welcome the ban on patio heaters (namely the part that loses due to this "opportunity to compete"). In the same way, there would also be advocates for a ban on the sale of various types of beer. It is crucial that the consumer benefits from the choice. If the majority of consumers condemned the patio heaters as climate killers, mushroom-free hosts would have a competitive advantage and the mushrooms would quickly disappear from cities.

There are more important things than lightbulbs and patio heaters. So why the fuss? It's worth it, because further bans could follow. What will be the next victim of the regulatory mania? What about the energy costs of standby devices? According to the Federal Environment Agency, Germany's private households waste energy for 3.3 billion euros a year through standby mode. So far, consumers have been educated. But wouldn't it be easier to ban standby devices altogether? Air conditioning systems are also energy guzzlers (and many consider them to be as superfluous as the patio heaters). Shouldn't they also be banned? Proponents of a patio heater ban may even agree. But what about weekend trips to Paris or London? Also forbid? The use of a three-room apartment by a single - a pure waste of energy? The energy costs for a full bathtub are roughly four times higher than for a shower. Do bathtubs also have to be banned? What about heated swimming pools, saunas and solariums? Waste of energy? Should private cars be banned and people be forced into public transport? With the same right, one could forbid the ovens in single households, because if no more than two servings are prepared, a microwave saves up to 15 percent electricity compared to the oven. (Conversely, microwaves would of course have to be banned in larger households.)

These examples clearly show that bans may not be the way to go. Admittedly, there will be no ban on private cars. Since there are significantly more small car users than patio heater enthusiasts, no political majority could be found for this. Bans can only be enforced where user preferences are weak or minorities are affected. The indignant majority imposes its preferences on the minority. The majority oppress the minority. The "bad" use of energy is regulated away. But isn't the allocation of scarce resources to competing uses actually the function of market prices? Ultimately, don't energy prices ensure that energy is used in the best possible way? Innkeepers quickly notice whether the patio heaters are paying off. If energy prices are high enough, consumers will perhaps do without the standby function and use energy-saving lamps.

So why don't consumers voluntarily switch to the cheaper pears? Do they just know better than the EU what is good for them? Perhaps the majority of consumers prefer the light to the conventional bulb. It is argued that the energy-saving lamp is harmful to health. Maybe users just like the shape better. Maybe they don't know anything about the cost advantages of energy-saving lamps. Consumers may even act irrationally. But is it allowed to patronize them? Ultimately, every consumer should know best what is good for them.

Everyone should be able to buy and use what they can pay the price for, regardless of whether it harms the climate or not. Ideally, the price allocates the resources to the best possible use. There are no reasons for government intervention. The reality is often different. Market failure prevents the efficient use of resources. Ill-informed consumers may only buy conventional lightbulbs because they think too short-term. Because they are not even aware of the long-term cost savings of energy-saving lamps. That is possible. But then it would be easy to educate consumers instead of prescribing them.

Another argument could be that the price of energy is too low from a societal point of view. If the use of the public good “climate” does not play a role in the purchase decision - and there are thus externalities that the market price does not reflect - state intervention may be justified. These prerequisites for state intervention apply to energy use. However, this hardly justifies the ban on conventional light bulbs or patio heaters. Because the energy price is too low not only for the use of pears and mushrooms, but for any consumption. The externality affects the bathtub as well as the light bulb. Another form of government intervention is necessary. And present. Because in Europe there is already an upper limit for CO2 emissions; Within this upper limit, emissions trading ensures that the energy is put to the best possible use. If less energy is demanded, the pollution rights released by the energy producers are used elsewhere. It follows that the ban on pears and mushrooms is completely useless for climate protection. Emissions are shifted, not reduced. Not a ton of CO2 is saved.

Environmental protection is important. But we already have alternative instruments that are in line with the market. If less CO2 is to be emitted, the permissible upper limits must be reduced. Within these limits, trading in emissions certificates ensures the best possible allocation. Inadmissible restrictions on the freedom of choice, the oppression of the minority by the majority, are superfluous.

Why are bans still popular? Don't the politicians see the pointlessness of the bans? Some of the decision-makers are likely to be convicts who ignore factual arguments for ideological reasons. The probably larger part serves the (supposed) interests of its constituents. It does not matter here whether a measure actually takes effect; the important thing is to be re-elected. And for this it is enough if the voter believes that the chosen policy is correct. The oppression of the minority is consciously accepted in order to generate majorities. In the case of the pear, another possible explanation starts with the producers. Like the part of the innkeepers who lose to the competition, some of the lightbulb producers also have an advantage from the ban. The profit margins for traditional lightbulbs are low. Their ban stimulates the demand for more expensive pears. The margins are higher there; profits can rise, at least temporarily. Politics follows the interests of the lobbyists. Political economy in its purest form.