The Free Market 18, no. 1 (January 2000)
From the 1930s through the 1980s, government claimed it could innovate better than private markets. That’s what the boondoggles like TVA, Nasa, and Semitech were all about. Hardly anyone believes that anymore, so the rationale for government regulation of technology has changed. It now concerns such vagaries as fairness and wise resource use.
Yet even judged by these criteria, the free market is superior. What’s more fair than permitting consumers to voluntarily decide which technologies are best? And since when has government been wiser in the use of resources than the market system driven by competitive pressure to keep costs down?
In fact, government plays a purely destructive role in its technology. The most obvious case is Microsoft. Announcing that the company is a monopoly, the regulators are working with the courts to slice up the company, supposedly to create competition but actually to reward Microsoft’s competitors. Is there anyone who truly believes that the software industry will be more innovative and responsive after such intervention? Even Microsoft’s enemies are getting squeamish about the prospect.
And yet nothing illustrates the absurd results of government intervention in technology like the great toilet tank fiasco. In a little-noticed law passed in 1992— the Energy Policy and Conservation Act Congress mandated that all future toilets installed in homes had to qualify as Ultra-Low Flush (ULF). Older toilet tanks, invented by greedy capitalists who care nothing about wasting water, held from 3.5 to 7 gallons of water. The much-heralded ULF tank holds 1.6 gallons. Congress cheered and made it official.
But there is a hitch. It turns out that the ULF doesn’t work well. It sometimes takes two and three flushes to do the work of one old one, so it does not necessarily save water. And so what if it does? It clogs and overflows easily, which frequently leads to floor and ceiling damage (not to mention unsanitary conditions). It also proves very difficult to keep clean. You must use chemicals in the tank, which in turn break down the mechanical parts inside the tank, which then must be replaced regularly. No longer can a toilet be flushed with confidence. The whole process must be monitored with great attention to detail.
In a free market, some entrepreneur might have dreamed up a ULF. But it wouldn’t have lasted. Given the low price of water, the need to - conserve - it reflects not economic reality but a leftist civic piety. Indeed, as much as the left has long hated the indoor toilet, consumers hate the ULF just as intensely. A survey from the National Association of Home Builders reported nearly 80 percent dissatisfaction. So attached are consumers to the old models that local and state governments have taken to paying contractors to install new ones, just to meet code.
In a market setting, then, the ULF wouldn’t have met the market test, except among those consumers who value a few bucks a month more than clean toilets that work well. It turns out that there was wisdom in the old large tanks. They weren’t just evidence of a conspiracy to waste water. They were designed to be efficient, fast, foolproof, and clean - all opposite traits from the tanks blessed by government.
Under the restricted market conditions imposed by Congress, the result has been a thriving gray market in Canadian toilet tanks. Consumers can buy them legally, but they are expensive, especially if you include shipping. But if a contractor or retailer buys one in Canada to install or sell in the US, he faces fines of $2,500. Meanwhile, Canadian retailers are making a mint.
American tank retailers have responded to the regulations with undying devotion to the consumer: they have completely reinvented the toilet, putting electric pumps inside designed to shove the water through the pipes. These are also very expensive (a high-end version can cost $800) and they use electricity, a resource that Congress apparently thinks is less valuable than water.
The ULF propagandists say that the old tanks allowed 22,000 gallons of drinking water to be flushed down the toilet every year. But just who is to decide that it is crucial to save water to drink rather than to make sanitary living possible? The indoor toilet is a luxury that most of the developed world has universally enjoyed only in the past 50 years. Leave it to government backed by leftist ideologues who hate consumer convenience to take us a step back by force of law.
If the bureaucrats had their way, the outhouse would again become the norm. Another option promoted by the back-to-nature types: an indoor composting toilet that uses no water. No thanks.
The toilet tank fiasco is far from unusual. The same process of bad results, market distortions, and consumer exploitation occurs whenever government gets involved in manipulating market technologies. When the regulators get around to doing the same to software, the results will be the same: driving innovation underground or forcing contortions just so that entrepreneurs and consumers can keep their heads above water.
Jeffrey Tucker is the editor of The Free Market.
