Annapolis Institute Overview


Mandates winning over marketplace

by Phil Burgess, Unabridged from the Rocky Mountain News, September 6, 1996

First in a three-part series.

Cloaked as “reform,” the Democratic Congress and the Clinton administration are seeking to expand government control over four of America’s most successful and most globally competitive industries.

  • The health care industry. In the old days, South American generalisimos nationalized an industry by deposing boards of directors and appointing their own. Today, governments get control of an industry by controlling its finances. That’s really what is going on with nearly every health care “reform” proposal, including President Clinton’s. When you let government define the product (e.g., the health care benefit package) and determine its price, you let government control the industry. That’s why those who call most health care reform proposals “socialized medicine” are essentially correct. Reason: Governments can now use computers, regulations and bureaucrats to achieve what tinhorn dictators did with soldiers and bayonets.
  • The energy industry. Attempts last year to impose carbon and Btu taxes on energy were not simply measures to raise more tax revenues; they were designed to dramatically reduce U.S. coal consumption. Look for new initiatives by the Clinton administration to use taxes and regulations to change the U.S. fuel mix in the next Congress.
  • The transportation industry. The administration is likely to propose caps on carbon dioxide emissions in the next Congress — to comply with treaties signed at the 1992 Earth Summit in Rio de Janeiro. A C02 cap would give the federal government direct control over the energy industry and effective control over the transportation industry as different segments of these industries scramble to get “their share” of the available C02 allocations. Reason: Caps create scarcity and scarcities create rationing. When things are rationed, he who controls the rationing system controls behavior. Punchline: The government, not the customer, will determine the vehicle mix.
  • The telecommunications industries. After months of hearings, intense lobbying and many fights over technical details, Congress is about to legislate a federal takeover of U.S. telecommunications policy. Example: The Senate’s “reform” package will subject elements of the communications industry to as many as 60 new federal regulatory proceedings. This new layer of regulation comes at a time when the U.S. leads the world in telephone and cable TV services and technologies. That lead will evaporate as these industries fire engineers and hire lawyers to deal with the expanding role of the federal government.

Listen to Idaho utility regulator Joe Miller, chairman of the communications committee of the National Association of Regulatory Utility Commissioners: “In an era when the telecommunications sector needs less, not more, regulation, (proposed legislation) is a regulatory nightmare which wil1 surely produce gridlock . . . If you thought the Cable Act of 1992 was a regulatory quagmire, this is cable squared.”

Miller then notes that proposed legislation “nationalizes areas of telecommunications policy that traditionally have resided with the states (in a bill that is) rife with pre-emptive provisions (and makes state regulation) subject to federal guidance.”

Bottom line: Congress and the administration increasingly prefer mandates over markets, a mainframe government in a PC world. That could change after the November elections.

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