Do They Really Hate Regulation?

over-regulation We know, of course, that one of the many overclass insistences promoted and protected by both wings of the reigning Duopoly is the claim that public rules for doing business are “burdens that have stifled innovation and have had a chilling effect on growth and jobs.”

The premise of this claim, of course, is that only unleashed capitalists could ever possibly create full employment, because “vibrant entrepreneurialism is the key to our continued global leadership and the success of our people.” This, despite the screamingly obvious fact that the one and only instance of full employment in the modern United States occurred when the government suspended the unhindered operation of corporate capitalism, i.e. during the publicly administered economy of the Second World War.

If you know somebody who says regulations have prevented any aspiring capitalist from proceeding with an investment, ask that person for the details. There won’t be any, because, contrary to prevailing dogma, existing regulations simply do not stop anybody from investing in anything that is even remotely decent and beneficial to anybody but the aspiring overlords.

Meanwhile, adherents of the over-regulation shibboleth might profit by reading this little article from Bloomberg Business Week. There, author Ken Wells reports:

Over the past five years the price of photovoltaic panels has plummeted 75 percent, due largely to a glut of Chinese-made panels. The fall in prices rendered technically advanced photovoltaic panels, like those produced by Solyndra and other U.S. companies, too expensive to compete. But cheap panels have been a godsend for consumers.

Nationally, the average cost of residential installations—including hardware, permits, and labor—has plummeted from $9 a watt in 2006 to $5.46. Averaging in commercial industrial installations, the national installed price plummets to $3.45 a watt, says the Solar Energy Industries Association, a Washington-based trade group.

The result is a burgeoning rooftop revolution. The SEIA says almost 52,000 residential rooftop systems were installed in the U.S. last year, up 30 percent from a year earlier. Total rooftop installations, including on commercial buildings, grew 109 percent from 2010 to 2011, according to SEIA data. Total photovoltaic installations are projected to grow an additional 71 percent this year from 2011 levels.

But this boom is puny compared to what it ought to be:

Australia projects that 10 percent of its 8 million houses will have rooftop systems within the next 12 months—most of that growth coming in the past three years. European rooftop installations continue to outpace those in the U.S., even as some countries begin to pare subsidies that have helped spur a continental rooftop boom. Including residential, commercial, and industrial-scale projects, the world had installed about 67 gigawatts of photovoltaic power at the end of last year—up from just 1.5 gigawatts in 2000.

Despite [the] breakthroughs, the U.S. economy is harnessing only a fraction of solar’s potential benefits. Based on U.S. Census Bureau data, about 100 million U.S. residential units could physically hold rooftop systems one day, generating by one estimate 3.75 trillion kilowatt hours of electricity a year. In 2011, total U.S. electrical generation from all sources was about 4 trillion kilowatt hours—42 percent of that from coal, according to the U.S. Energy Information Administration.

So, why does the United States — where a mere 52,000 installations constitutes a boom — lag so far behind? Turns out it’s the capitalists, who, in this case, fairly love their snarled and snarling regulations:

The trouble is, many of the big, investor-owned utilities that provide about 85 percent of America’s electricity see solar as both a technical challenge and a long-term threat to their 100-year-old profit models. And the lack of a national energy policy means regulation of solar is up to states, public service commissions, and a wealth of local governments and bureaucracies—many of whom have a vested interest in maintaining the status quo.

The hidden costs of obtaining permits and regulators’ approval to install rooftop panels is a big reason the U.S. lags behind Germany, which leads the world in rooftop installations, with more than 1 million. The price of installed rooftop solar in Germany has fallen to $2.24 per watt. In fact, on a sunny day in May, rooftop provided all of Germany’s power needs for two hours. “This is a country on latitude with Maine,” says Dennis Wilson, president of the Mid-Atlantic Solar Energy Industries Association, a solar-installer trade group. “Germany is showing us what’s possible—if we can just get our act together.”

That’s easier said than done. Unlike the U.S., Germany has a national solar policy, a quick, inexpensive permitting process, and a national mandate that utilities sign up rooftop installations under what’s known as a feed-in tariff—essentially a long-term contract whereby the utilities agree not just to allow the solar on their grids but also to buy the excess power from consumers.

By contrast, the U.S. has more than 18,000 jurisdictions at the state and local level that have a say in how rooftop solar is rolled out, according to the U.S. Department of Energy. What’s more, electricity is supplied by investor-owned utilities, mostly state-regulated monopolies, which supply power from centralized hubs to captured consumers. Profit is in part tied to growth based on an ever-expanding demand as populations increase.

Rooftop solar poses a threat to that model by turning consumers into producers, thereby sapping utility revenue streams. It also diminishes the need to build expensive new plants and transmission lines.

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Marla Singer
Marla Singer

Michael, I fully cosign the general argument – most regulations emerge to serve business needs, not the public – but the substantive policy area is a rather unfortunate example. Solar technology is essentially a waste of time as a response to energy challenges (it can potentially satisfy residential needs at best – at a huge cost), but as far as meeting overal energy demand (residential, comercial, industry, and transportation), that’s a pipe dream – or at least a possibility that’s many centuries away. (That famous germanlsolar plant that generated a huge output was generating exactly zero Kwatts just a few… Read more »

Michael Dawson

I don’t disagree with that Marla, and don’t in any way mean to suggest that solar electricity stands a chance of fully or even mostly powering the epic waste regime we live under at present. But, nonetheless, it is also not trivial or useless. It’s also interesting as a vehicle of possible partial (but still meaningful) de-commodification. I would also say that many — though certainly not all — regulations on business are indeed forms of public self-defense. But those are hardly the reason those mountains of unused capital are sitting around in overclass coffers. The regulations that create profits… Read more »

Marla Singer
Marla Singer

This is OT, I know that you follow the Monthly Review, but in case you’ve missed this, I’m sure you’ll enjoy this:

Marla Singer
Marla Singer

ah.. I’m glad I mentioned it; I’ll get the book

High Arka

The “solar energy” you’re being so pessimistic about is in a protracted, stifled infancy. Critiquing “solar” as “unable to meet energy needs” is like critiquing the Wright Brothers’ plane as “unable to meet transatlantic flight needs.”

The right human focus could make it something that would satisfy your desires and alleviate your fears, if it were given a tenth the attention of, say, oil.

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