What Should We Fear Most and What Should We Do About It? - Cato Institute
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2 / Regulation / WINTER 2020–2021
B R I E F LY N O T E D
What Should We Fear
and bees,” according to data from the
National Safety Council. That works out
Most and What Should
to a risk of 1 in 5.2 million. For males, the
risk increases to 1 in 2.8 million per year
We Do About It?
(57 out of 159 million men) and 1 in 1
million for black men (21 out of 21 million
black men). That is roughly the same risk
✒ BY DAVID R. HENDERSON AND CHARLES L. HOOPER as death from “exposure to excessive nat-
S
ural heat” or from drowning in a bathtub,
according to the National Safety Council.
ome acquaintances recently paddled surfboards and kayaks
Compared to the risk from motor vehi-
into the Pacific to disperse a relative’s ashes where he loved to cles, the chance of death for the average
surf. During the memorial service, one brother of the deceased unarmed American is about the same as
expressed concern about the risk from sharks. the chance of death from traveling 15 miles
The image of an aggressive shark in the frequently, that risk is higher. For someone by car; for an unarmed male it is about the
deep ocean is graphic and terrifying, but who eschews open waters, the risk is lower. same as the risk of traveling 29 miles, and
the risk of mundane threats far outweighs To put that risk in perspective, there for an unarmed African-American male it
the risk from shark attack. The dead man’s were just over 40,000 motor vehicle deaths is about the same as the risk from travel-
brother should worry much more about in the United States in 2017, a typical year. ing 80 miles. While worrisome as a justice
heart disease, which felled his brother, and That works out to 1 death in 8,078 people, issue, those deaths of black men are not
devote his attention to lowering that and or one death per every 80 million miles much of a risk concern.
similar risks. There is only so much time traveled. So, the annual risk of dying from
and energy; each unit of energy spent on an unprovoked shark attack equals the risk Larger risks / The typical American faces
lowering the risk from sharks is one less of driving 0.04 miles—or 217 feet. much greater risk of death from compara-
unit that can be spent on hearts. What about the risk of terrorism, which tively mundane causes. Heart disease kills
What should we fear? What threats are has received a lot of attention (and govern- about 1 in 502 Americans each year, while
most likely to kill us? Setting aside cata- ment spending) over the last two decades? cancer kills 1 in 542.
clysmic events such as nuclear wars and During the 22-year period from 1995 to The number of deaths from seasonal flu
planet-altering meteorites, there are some 2016, which includes the 9/11 attacks in varies significantly from year to year, but it
risks that generate a lot of fear but few 2001, there were a total of 3,277 fatalities has averaged about 40,000 in the United
deaths, such as shark attacks, terrorism, from terrorism in the United States, accord- States in recent years, which works out to 1
and killings by police. On the other end ing to data from the University of Mary- death in 8,125 Americans. The good news
of the spectrum are everyday risks that kill land’s National Consortium for the Study is that rate has fallen significantly over the
a large number, such as heart disease and of Terrorism and Response to Terrorism. decades; if the death rate from flu in the
cancer. In between are risks from motor Using those numbers, the risk of death 1950s and 1960s were applied to today’s
vehicle collisions and the seasonal flu. And from terrorism for the average American is population, we would see over 160,000
this year there is a new risk: COVID-19. about 1 in 2.2 million per year. That equals deaths per year.
the risk of driving 37 miles. Put another If the death rates from these diseases
Putting small risks in perspective / Let’s way, in a given year we should be as fearful seem high, it is because they are. Heart
start with the risk from our introduction. of driving 37 miles as we are of dying from disease alone kills as many Americans each
In 2019, there were two deaths from unpro- a terrorist attack. year as the combined U.S. combat casual-
voked shark attacks in the whole world, The troubling deaths of George Floyd ties from all American wars.
though the longer-term average is about and some other African Americans at the Where does COVID-19 fit? As this
four per year. Based on the latter number, hands of police officers in recent years have was written in mid-October, COVID-19
the risk to the average person of dying from raised questions about the risk posed by had killed more than 220,000 Americans.
a shark attack works out to 1 in 2 billion police, especially to African-Americans. How many Americans will it kill in 2020?
per year. For someone who is in the ocean According to a database assembled by the No one knows, but a reasonable guess is
Washington Post, an average of 62 unarmed around 300,000, which would be about 11%
DAVID R. HENDERSON is a research fellow with the
Hoover Institution at Stanford University and the people die each year at the hands of the of total U.S. deaths in 2017. That would
editor of The Concise Encyclopedia of Economics (Liberty
Fund, 2008). CHARLES L. HOOPER is president of Ob- police. That is about the same number of mean that 1 in every 1,100 Americans will
jective Insights, a firm that consults with pharmaceuti- deaths caused by “contact with hot tap have died from COVID-19 in 2020. That
cal clients. They co-authored Making Great Decisions in
Business and Life (Chicago Park Press, 2005). water” and “contact with hornets, wasps would be higher than the death rate from
WINTER 2020–2021 / Regulation / 3
of new drugs approved dropped
by 60%, a number that should
disturb Americans. According
to his model, there should have
been about 40 new approvals
each year after the new law, but
instead there were just 16.
Subsequent studies have con-
cluded that this change in the
law did not result in weeding
out inferior drugs. According
to Henry Grabowski and John
Vernon, “In sum, the hypothe-
sis that the observed decline in
new product introductions has
the flu in the 1950s and 1960s, but it would in addition to safety. This may seem like a largely been concentrated in marginal or
be substantially below the tolls for both good idea, but it significantly slowed the ineffective drugs is not generally supported
heart disease and cancer. Put another way, approval of new medicines and reduced by empirical analyses.” Peltzman himself
COVID-19 subjects us to a risk equivalent the number of new drug launches, while came to this same conclusion, seeing the
to that of driving about 73,000 miles. Table apparently not improving the efficacy of culling “as … if an arbitrary marketing quota
1 presents statistics on various risks. those medicines. … had been placed on new drugs after 1962.”
Putting all these numbers in perspec- In 1973, economist Sam Peltzman ana- How could the FDA’s new rules not
tive, the average American is 4 million times lyzed the effects of Kefauver–Harris by com- have affected the ratio of good to bad
more likely to die from heart disease or can- paring the number of new chemical entities drugs? Peltzman surmised, “The penalties
cer than from a shark attack and 20,000 (not just reformulations) approved by the imposed by the marketplace on sellers of
times more likely to die from heart disease FDA before the law changed with the num- ineffective drugs before 1962 seem to have
or cancer than from the police (assum- ber approved in the decade after the change, been sufficient to have left little room for
ing the person is unarmed). The average as well as econometrically estimating values improvement by a regulatory agency.” In
American is 4.2 times as likely to die from for that same period if there had been no other words, the market did as good a job
heart disease or cancer as from COVID-19 policy change. He found that the number of weeding out ineffective drugs before
and 9.4 times as likely to 1962 as Kefauver–Harris
die from anything other Table 1 did afterward, without
than COVID-19 as from U.S. Statistics for Various Causes of Death, 2017 the harmful side effect
COVID-19. Cause of Death Deaths per Year 1 Death in N Equal to the Risk
of dramatically lowering
persons per Year of Driving M Miles the release of new drugs.
FDA reform / What policy Heart disease 647,457 502 159,000 Why should we care
responses could lower Cancer 599,108 542 147,000 that there have been
Americans’ risk of dying Accidental deaths 169,936 1,912 41,800 fewer new drug approvals?
from the medical condi- Chronic lower 160,201 2,029 39,400
Columbia University’s
tions discussed above? respiratory disease Frank Lichtenberg stud-
We have one recommen- Influenza and 55,672 5,838 13,700 ied the effects of phar-
dation: reform the U.S. pneumonia maceutical innovation
Food and Drug Admin- Suicide 47,173 6,890 11,600 by comparing the vintage
istration. Motor vehicles 40,231 8,078 13,500 (the launch year) of drugs
In 1962, Congress Homicide 19,454 16,706 4,800 used in a country with the
passed the Kefauver–Har- Terrorism 149 2.2 million 37 increase in national life
ris Amendments, which Police (all Americans) 62 5.2 million 15 expectancy at birth. This
substantially increased research was motivated,
THINKSTOCK IMAGES
Police (all men) 57 2.8 million 29
the threshold for FDA interestingly enough, by
Police (black men) 21 1 million 80
approval of new drugs research that showed a
Sharks (worldwide) 4 1.95 billion 0.04
by requiring drug com- positive correlation with
ALL CAUSES 2,813,502 116 692,000
panies to prove efficacy higher productivity in
4 / Regulation / WINTER 2020–2021
B R I E F LY N O T E D
manufacturing firms that used more mod-
ern, or later-vintage, equipment. Could a COVID-19 and Opioid
similar pattern be seen with drug usage?
Here is what he found: Addiction Treatment
For the 30 countries in our sample, ✒ BY FELER BOSE
T
between 2000 and 2009 popula-
tion-weighted mean life expectancy at
birth increased by 1.74 years. The esti- he COVID-19 pandemic has changed the treatment of addic-
mates indicate that the increase in life tive disorders. Until this year, most patients using methadone
expectancy at birth due to the increase to treat opioid addiction were required to visit a clinic daily to
in the fraction of drugs consumed receive the medication, although tightly controlled take-home doses
that were launched after 1990 was 1.27 were allowed for a small number of patients. That highly regulated and
years—73% of the actual increase in life
rigid treatment model was inconvenient four hours for the opioid heroin. Metha-
expectancy at birth.
for most patients but lucrative for the done thus can be used to treat addiction
As with all retrospective studies, Licht- clinics. to other opioids by helping addicts to
enberg’s work shows only correlations and Today, a majority of the methadone detoxify or at least transition away from
cannot prove cause-and-effect. Yet if this clinics are operated by for-profit corpora- more dangerous drugs. Under a 1974
relationship is causal, three-quarters of the tions and comprise one of the most lucra- presidential order, methadone came into
increase in life expectancy we have enjoyed tive businesses in the field of drug treat- use as a treatment for patients addicted
in recent times is due solely to our adoption ment. Any attempt to change this model to heroin, including soldiers who became
of newer drugs. has been opposed by the clinics. As a result, addicted to heroin while fighting the
New pharmaceuticals are friends, not the treatment of opioid addiction remains Vietnam War. The methadone clinic
foes. Yet, the FDA treats all new drugs as firmly separate from “normal” medical model was also codified in 1974 with the
guilty until proven innocent. The Kefauver– practice, which generally pursues more passage of the Narcotic Addict Treatment
Harris Amendments have augmented that convenient options for
attitude. That attitude should be reversed. patients, like being seen Opioid addiction treatment remains
If we want to lower our risk from in a medical office.
firmly separate from “normal” medical
COVID-19, one of the most fruitful COVID-19 and the
approaches would be to speed up research requirement for social
practice, which generally pursues
and approvals for drugs that could treat distancing prompted the convenient options for patients.
the disease. An easy way to do that during federal Substance Abuse
the coronavirus pandemic would be to and Mental Health Ser-
roll back the FDA’s efficacy requirement vices Administration (SAMHSA) to tem- Act, which requires patients to receive
for COVID-related drugs. The same goes porarily relax the rigid requirements of methadone on a daily basis in a strictly
for cancer and heart disease drugs. If drug patients standing in line outside metha- regulated setting.
companies can demonstrate safety, let the done clinics for their daily dose. SAMHSA
drug makers market or otherwise distribute has allowed methadone clinics to give An alternative / Many opioids—including
their new medicines and allow researchers, patients 15–30 days of methadone to take at methadone—cause dose-related respira-
doctors, patients, and hospitals to evaluate home. These relaxed rules should continue tory depression that can result in death
efficacy. This approach has the potential to after the pandemic ends. The treatment of at high doses. Buprenorphine, an opioid
save lives today. R opioid addiction should be reintegrated developed in the 1970s as a potent anal-
into mainstream medical practice. gesic for post-operative pain, is character-
READINGS
ized by a “ceiling” effect on respiratory
■ “Pharmaceutical Innovation and Longevity
History / Methadone was originally devel- depression: as the dose increases, respira-
Growth in 30 Developing and High-Income Coun-
tries, 2000–2009,” by Frank R. Lichtenberg. Health oped in Germany during World War II as tory depression plateaus. Buprenorphine
Policy and Technology 3(1): 36–58 (2014). a synthetic opioid to alleviate an acute users thus are unlikely to die of respiratory
■ Regulation of Pharmaceutical Innovation, by Sam shortage of morphine. Methadone is arrest or cessation. Yet, like methadone,
Peltzman. University of Chicago Press, 1974. relatively long-acting, with an effective buprenorphine can alleviate craving for
■ The Regulation of Pharmaceuticals: Balancing the half-life of 24 hours compared to about more dangerous opioids. The safety of
Benefits and Risks, by Henry G. Grabowski and John M. buprenorphine is conducive to using the
FELER BOSE is associate professor of economics and
Vernon. American Enterprise Institute Press, 1983.
finance at Indiana University East in Richmond, IN. medication in normal medical practices.
WINTER 2020–2021 / Regulation / 5
If buprenorphine can be prescribed by the methadone clinics will lobby for rein- allowed by SAMSHA should be made per-
a physician in an office-based setting with- stating the daily-clinic-visit model. On manent. This would require the repeal
out restrictions, why do methadone clinics the other hand, if the experiment is rea- of the Ryan Haight Act requiring initial
continue to dominate the field of opioid sonably successful, the clinic model that in-person doctor consultation before the
treatment? The answer is that regulatory has been in place for over 50 years may prescribing of buprenorphine. In addi-
barriers have been erected to protect the not return. tion, methadone clinics, which by law can
lucrative methadone clinic model. only provide that type of addiction service,
To maintain the viability of methadone Conclusion / The coronavirus pandemic should be allowed to operate like urgent
clinics while introducing a new office- has reduced the separation between the care facilities and offer patients a range of
based treatment modality using buprenor- treatment of opioid addiction and normal services for all addictive disorders rather
phine, policymakers reached a compro- medical practice. The temporary measures than just dispense methadone. R
mise whereby physicians have to take an
eight-hour course on buprenorphine and
then apply for Drug Enforcement Admin-
istration permission to prescribe the drug. Adapt or Suffer: Demographic
Further, physicians are only permitted to
have 30 patients in treatment in their first Change and Consequences
year of prescribing the drug, and then 275
(recently raised from 100) in subsequent
years. In 2018, the Substance Use Disorder
for the United States
Prevention that Promotes Opioid Recovery
✒ BY THOMAS GRENNES
M
and Treatment for Patients and Communi-
ties Act did expand the prescribing author- ajor demographic changes are occurring throughout the
ity for buprenorphine to physician assis- developed world. Although world population has doubled in
tants and nurse practitioners. Nonetheless,
the last 50 years and grown almost continuously since at least
the tight restrictions on buprenorphine
have had their intended effect of protecting
10,000 B.C.E., prominent demographers are now projecting a forth-
the methadone clinics. As a result, less than coming peak in world population and a subsequent decline. The United
4% of physicians have obtained the DEA Nations estimates the peak will come and it has been below 2.0 since 2010. If it
waiver and even fewer prescribe buprenor- around 2100 while a group at the Uni- continues at this rate or below, the U.S.
phine on a regular basis. versity of Washington says it will hap- population will decline unless there is off-
pen around 2060. Though skepticism setting immigration. This same trend is
The pandemic / The national opioid emer- is appropriate for projections about the occurring in other high-income countries
gency in 2017–2018 did not dramatically distant future, these estimates incorpo- around the world.
change the methadone-clinic-dominated rate large reductions in total fertility rates Slow or declining population growth is
status quo. But the current pandemic (TFRs) that have been occurring for years new to the United States and to the world.
has. SAMHSA permits patients to take in nearly all the high-income countries in Negative consequences from this demo-
home a two- to four-week supply of the world, including the United States. graphic shift have already occurred, and
methadone doses and facilitates the uti- the problems will get worse unless there are
lization of buprenorphine by suspending Declining fertility / TFR measures the num- major reforms in economic policy. The rate
the requirement that the physician see the ber of children born to an average woman of economic growth has already declined
patient face-to-face before prescribing the over her lifetime. A TFR of roughly 2 is in the United States from its earlier 3% to
drug for the first time. necessary for a country to maintain a sta- 2%, and the latest Congressional Budget
Policymakers, treatment providers, ble population (in the absence of immi- Office (CBO) projection is for 1.6% annual
patient advocates, patients, and—most gration), with the offspring replacing their growth over the next 30 years. A total fer-
critically—methadone clinics are closely mother and father. tility rate below the replacement rate con-
watching this unprecedented relaxation The TFR for the United States was 1.7 tributes to aging of the population, and a
of the rigid policies. What will patients in 2019, the lowest in U.S. history. This is smaller and older population reduces the
do with the take-home doses? Will there not a blip; the U.S. TFR has been declining rate of economic growth. Countries like
be more overdose deaths, children acci- continuously from a peak of 3.7 in 1960, Japan, Italy, and Russia, which are expe-
dently ingesting the drug, and diversion riencing decreasing population, have had
THOMAS GRENNES is professor of economics emeri-
of the drug to others? If problems arise, tus at North Carolina State University. very little economic growth as a result.
6 / Regulation / WINTER 2020–2021
B R I E F LY N O T E D
Declining standard of living / A country’s loan guarantees, low interest rates, and exacerbate the insolvency problem. A pro-
gross domestic product can be expressed Federal Reserve purchases of private assets. posal to raise the cap on income subject
as the size of its labor force multiplied by to the tax would reduce the severity of the
its average productivity of labor. A lower Social Security / Slower population growth insolvency problem.
fertility rate lowers the population, which reduces economic growth and the stan- Social Security’s insolvency problem
in turn reduces the labor force about 20 dard of living. It also reduces the sus- is well known, but Congress stubbornly
years later. A smaller population reduces tainability of Social Security and other refuses to make reforms that would increase
GDP directly, and aging further reduces pension plans. Social Security is a pay-as- its revenues relative to its benefits. Reform
GDP by shrinking the size of the labor you-go system in which benefits delivered faces strong opposition, but Congress did
force. The U.S. labor force participation to retirees in a given year are limited to implement reforms in the past, when the
rate has already decreased from 67% to what the program receives from payroll program faced the same problem of bene-
63% since 1968. taxes on current workers in the same year, fits exceeding payroll tax revenue. In 1983,
Aging also reduces labor productivity plus any drawdown in the Social Security Congress raised payroll taxes and reduced
through various channels. Average health Trust Fund. Thus, anything that reduces benefits by raising the age at which people
and ability to perform certain tasks decline the future labor force reduces the ability qualify for full benefits. The higher ages
with age. Labor productivity also declines to pay future retiree benefits. Increased for eligibility were phased in gradually, so
as economic changes make some previ- longevity of retirees also contributes to that no one faced a large immediate shock,
ously acquired skills obsolete. All these fac- the solvency problem of Social Security and subsequent complaints were mild. As a
tors contribute to the CBO’s projection of by increasing total benefits to be paid out. result of those changes, the program began
slower productivity growth in the future. The 2020 Trustees Report, which came accruing cash surpluses that expanded its
Aging can reduce the productivity of out before the COVID-19 pandemic, trust fund—until recently.
workers, but it can also reduce the pro- projected that the trust fund would be Public pension reform has been diffi-
ductivity of business firms. A set of rel- exhausted by 2035. This means projected cult to achieve in other countries, but it has
atively inefficient Japanese firms, called payroll tax revenue would not be enough to happened. Sweden recently implemented
“zombies,” contributed to a decade of slow pay the promised benefits to the expected a major reform, transforming its system
growth in Japan in the 1990s. They were number of retirees in that year. The short- from a defined benefits plan like Social
unable to earn enough revenue to service fall would be $6,600 per person, which is Security to a defined contribution plan
RCLASSENLAYOUTS/GETTY IMAGES
their debts, and they were kept alive by var- about 24% of normal benefits. Anything in which money is paid into a worker’s
ious subsidies from the Japanese govern- that would lower revenue or increase prom- retirement account while he is working.
ment. Similar firms have been identified ised benefits would cause the fund to be
in the United States, and as the share of exhausted earlier. Accordingly, in the wake Immigration / For any single country, pop-
zombie firms has increased relative to start- of COVID, the CBO now projects the fund ulation growth is affected by immigration
ups, productivity growth has declined. The will become insolvent in 2031. as well as the difference between births and
American zombies have been protected by Recent proposals to increase the pro- deaths in the national population. Thus,
the government in various ways, including gram’s benefits or reduce its taxes would immigration policy can offset problems
WINTER 2020–2021 / Regulation / 7
from a low fertility rate. In recent years, reform are not insurmountable, as demon- declines are happening in all the high-in-
immigration has contributed about half strated by major immigration liberalization come countries of the world. The low
of the growth in the U.S. population. The in Australia. Australians transformed their fertility rate has negative consequences
United States is a nation of immigrants, immigration policy from one of the most for the average standard of living in the
and newcomers have made major contri- restrictive in the world (the “White Austra- United States and for the sustainability
butions to national prosperity. Among lia” policy) to one that has resulted in one of Social Security.
recent successful business start-ups are of the highest shares of immigrants of any If America fails to adapt to the new
many that were founded or co-founded country in the world. demographic reality, it will suffer eco-
by immigrants or their children, including nomic losses. However, adverse effects can
Zoom, Amazon, Apple, Google, YouTube, Conclusion / The significant decline in the be avoided if Social Security and immigra-
and Tesla. America is fortunate that it U.S. fertility rate has been persistent, and tion policies are reformed to take account
attracts many immigrants with varying it shows no signs of reversing. The same of the new and lower fertility rates. R
skills, ranging from people with advanced
degrees to people with no more than an
elementary education.
Reform of immigration policy is a Bad Energy Legislation
possible solution to both the problems of
slower economic growth and Social Secu-
rity insolvency. Historically, the United
in New Mexico
States has received more immigrants than
✒ BY KENNETH W. COSTELLO
T
any other country. However, major surges
in immigration at different times in U.S. raditionally, the primary goal of electric utility regulation has
history have brought strong backlashes been to control the pricing behavior of monopoly providers in
against accepting additional foreigners.
order to achieve reliable electric supply at a low cost to consum-
The first surge occurred just before World
War I, when the foreign-born share of the
ers. Now, electric regulators are frequently tasked with other objec-
U.S. population reached 15%, the highest tives, particularly environmental. (See “Rent-Seekers Infiltrate Public
level in its history. The current backlash Utility Regulation,” Summer 2018.) A countries of the world. One country, even as
against immigration comes as the for- recent example is the New Mexico Energy large as the United States, let alone a single
eign-born share of the population has risen Transition Act (ETA), which became law in state like New Mexico, cannot achieve that
to nearly 14%. Opposition to immigration March 2019. It promises to clean the air of goal by itself. Thus, the ETA won’t have any
contributed to the 2016 electoral success local pollutants, mitigate climate change, detectable effect on climate change. It forces
of Donald Trump, the United Kingdom’s create new jobs, motivate firms to move to New Mexicans to spend their money on
“Brexit” from the European Union, and New Mexico, lower electricity rates, make electricity generation projects whose climate
the popularity of other nationalist/pop- New Mexico a leader in clean energy, and change benefits are next to zero. The ETA is
ulist governments in Europe. Based on redress almost any other imaginable ill not a serious policy to reduce global tem-
recent restrictions on immigration imple- that afflicts the state. perature. Instead, it furthers the symbolic
mented by the Trump administration, The ETA achieves these miracles by com- goals of environmentalists and sends the
the CBO assumes there will be 2.5 million mitting New Mexico to stringent renew- bill to electricity consumers, probably with
fewer immigrants in the next decade than able-energy and clean-energy standards regressive results.
it projected a year ago. pushed aggressively by special interests.
Increasing immigration to the United Such objectives are far beyond the tradi- Subsidies / A particularly troubling aspect
States could offset the negative effects of tional expertise of public utility regulation. of the ETA is its subsidies for renewable
a low TFR on both the rate of economic Deep decarbonization to achieve the energy. The ETA, for example, requires
growth and the sustainability of Social temperature-change limits (holding warm- generation technologies to be 50% renew-
Security. But opposition to a more liberal ing to 1.5° C above pre-industrial limits) able by 2030, 80% by 2040, and 100% car-
immigration policy is strong in the United advocated by climate activists requires bon-free by midcentury. To achieve the
States and other high-income countries. If collective action among the industrialized last goal may require the use of expen-
U.S. officials follow the backlash against sive technologies like carbon capture and
KENNETH W. COSTELLO is a regulatory economist
immigrants and impose additional restric- and independent consultant. He previously worked for advanced nuclear power plants that would
tions, that would magnify the negative the National Regulatory Research Institute, the Illinois likely require subsidies to shelter consum-
Commerce Commission, the Argonne National Labora-
effects of low fertility. However, obstacles to tory, and Commonwealth Edison. ers from their actual costs.
8 / Regulation / WINTER 2020–2021
B R I E F LY N O T E D
The ETA also downplays the potential
of natural gas, which is a reliable, afford-
able, and abundant energy source that
produces lower carbon emissions per unit
of output than traditional generator fuels.
There is an abundance of domestic natural
gas at affordable prices. Why should we
wean ourselves, over the next two decades,
from this energy source that has produced
tremendous benefits to individuals and
businesses in New Mexico and elsewhere? utilities from passing through excessive if anything, should be left to other gov-
(i.e., imprudent) costs to their customers. ernmental entities and market forces to
Bootleggers and Baptists / It is under- This shift toward cost-plus regulation address. (See “Public Utilities as Social
standable why environmentalists support diminishes a utility’s incentive to mini- Agencies,” Spring 2020.)
the ETA, but so does New Mexico’s largest mize its operating and capital costs. The Utility regulation should return to its
electric utility. The law guarantees that ETA has in effect created a “moral haz- original concern of incentivizing utilities
utilities recover their costs if they com- ard” situation: a utility has no financial to serve consumers at least cost. Climate
ply with the act while environmentalists risk for complying with costs imposed change policy should be left to national
achieve a transition away from fossil fuels by the ETA. and international policymakers. The ETA
to wind and solar. In many states, the core objective of asks utility customers to pay for the agenda
The losers from this bootleggers- electric utility regulation—to protect of special interests without receiving any
and-Baptists coalition are consumers. The consumers from the monopoly power of benefits. This is government at its worst:
ETA erodes the traditional authority of utilities—has been compromised because the politically connected exploit the gen-
the state utility commission to disallow of legislation like the ETA. These issues, eral public. R
I’ve been fighting for veterinary telemedicine for years.
Now, more than ever, telemedicine is critical for people, too.
It’s not just a good idea. It’s free speech.
I am IJ. AEVENSON/GETTY IMAGES
Ron Hines
Brownsville, Texas www.IJ.org Institute for Justice
National Law Firm for LibertyYou can also read
