When politicians and political activists talk about conservation, I know I am about to be mugged.
New calls for conservation have come out of the power fiasco in California. The great urban legend of our time is that California’s problem resulted from deregulation of electricity. That’s a laugh. What kind of deregulation would include control of retail prices, forced sale of generating plants, bans on long-term wholesale contracts, and environmental regulations that preclude the building of new generating capacity in the face of a doubling of demand?
There’s an inversion Orwell didn’t think of. War is peace. Freedom is slavery. Regulation is deregulation. The opinion molders, however, have been able to shape public discussion so effectively that the average person apparently believes that California is suffering blackouts because of free markets.
That’s bad enough. But what is worse is that the socialists of all parties want even more control. Republican and Democratic governors want the power to set electricity prices. Moreover, that fearsome word “conservation” is being spoken. More and more we hear that the only way to get control of the power situation is through conservation. This is the favorite “solution” of those who oppose the building of any new generating capacity. These are the people who so dislike industrialization that they wish it had never come to the United States. They want no new power plants and no new exploration for oil and natural gas — anywhere. It’s easy for them, of course. Most environmental activists are already well-off. The ones who will get hurt by their retrograde policies are those who have yet to make it, both here and in the developing world.
Conservation sounds cozy and nice. But it’s a snare. It shrouds policies that try to tell us how to live and deprive us of the freedom to make our own decisions. They used to call it “demand management,” but I guess that sounds too cold and bureaucrat. I’ll manage my own demand, thank you.
Energy conservation policies would one way or another compel us to use less power. But if you can’t decide how much power you want to use, you aren’t free. The guiding philosophy ought to be the old Spanish proverb, “Take what you want and pay for it.”
But that would leave the planners nothing to do. So they say the decisions cannot be left to each of us individually. Decisions must be made collectively — which means bureaucratically. They give the orders. We follow. Simple, see?
Don’t expect the conservation program to be gentle. The planners tried that and they failed. Each time they mandated efficiency standards for cars or air conditioners, we did what any self-respecting rambunctious free people would do: we drove more and ran the air conditioners longer. Savings in fuel? Zilch.
So no more Mr. Nice Guy. The next round of conservation measures will very likely include heavy energy taxes and draconian regulations. It won’t be pretty.
But let’s be clear: There is no need for government conservation measures. They are premised on two fallacies: first, that a free society is wasteful and, second, that energy shortages are the long-term condition of humanity. Nonsense.
As everyone knows, when a resource becomes more scarce, its price goes up. And when its price goes up, people economize, use less — conserve. Thus the free market contains its own conservation principle. People may not consciously intend to conserve on the resource, but since they will be trying to control their household budgets, they will do so anyway. It’s what Adam Smith had in mind when he coined the term “invisible hand.” As long as energy is scarce — which means as long as there is a price to pay for it — people will be careful in their use. The surest way to create wasteful use is to keep the retail price artificially low. Exactly what California did!
While energy will always be scarce (though less and less so), there need not be shortages in which it cannot be found at all. In a free market, while consumers have an incentive to conserve, producers have an incentive to find new supplies and to develop alternatives. That incentive is the profit motive. Thus the key to abundant energy is to keep power away from those who despise profits.