"We Want to Be Regulated"

By Yandle, Bruce | Freeman, January/February 2010 | Go to article overview

"We Want to Be Regulated"


Yandle, Bruce, Freeman


Efforts in Washington to write a major climatechange law are causing some Bootlegger/Baptist coalitions to fall apart and new ones to emerge. In late September Exelon Corporation, a major electric utility, followed industry partners Pacific Gas & Electric (PG&E) and PNM when it resigned from the U.S. Chamber of Commerce. The Chamber opposed the Waxman-Markey climate-change bill, which would sharply limit carbon emissions, raise the cost of power, and in effect impose as much as a 15 percent tax increase on each U.S. household. Exelon, PG&E, and PNM favor the law. They are also heavy nuclear-power producers.

In an earlier comment on the fracturing of the U.S. Climate Action Partnership (USCAP), an industry-environmentalist coalition pushing for capand-trade carbon emission controls, Environmental Defense Fund president Fred Krupp repeated a commonly held misconception about government regulation when he said: "It's very unusual for big corporations to raise their hands and say, 'We want to be regulated for something that we're not regulated for now.' " Exelon, PG&E, and PNW apparently make his point.

But as a matter of fact, industry support of regulation is not rare at all; indeed, it is the norm. And in the United States it is as American as apple pie.

Historical Examples

A somewhat casual investigation of business history reveals that it was the U.S. Chamber of Commerce, with the special assistance of General Electric president Gerard Swope, that supported passage of President Roosevelt's 1933 National Industrial Recovery Act. The Act, with its Blue Eagle codes affecting 2.3 million employers, attempted to place all American industry in a price-fixing cartel. But while the Chamber and many large firms supported FDR's cartel, many other firms, including Ford Motor Company, did not.

Going back further, we are reminded by Howard Marvel, writing in the 1977 Journal of Law of Economics, that it was the owners of the newly built water-powered textile plants that supported the English Factory Acts (1802 and on), not the owners of older mills that used far more labor per unit of output. The legislation limited child labor and hours and conditions of work, which raised the costs of labor-intensive producers. The industrialists who joined with other crusaders to support the legislation are remembered as philanthropists.

In 1907 it was the electric utility industry, led by Samuel Insull, that lobbied for state regulation in the hopes of escaping less predictable and intractable municipal control. In 1910 American Telephone and Telegraph Company chairman Theodore Vail successfully called for federal regulation of long-distance telephone calling just when the Bell patents were expiring and new competition was, as he put it, "skimming the cream" from the market. …

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