Boy has the government got a deal for you — it’s going to sell you a washing machine that will lower water usage in the United States and it is going to save you $200 over its lifetime. Sure, and you’ll be able to retire comfortably on those 2 percent returns from Social Security.
The national Appliance Energy Conservation Act, passed in 1987 and amended in 1992, sets mandatory water and energy usage standards for household appliances. For washing machines, the act requires manufacturers to cut energy use by 22 percent.
To make more energy efficient washers, however, the manufacturers have to increase the cost. The biggest hit is with top loading washing machines. A top loading washing machine that costs $300 today is going to retail for about $1,100(!) under the new standards. The cost of front loaders will increase by only about $200, essentially forcing many consumers to go with front loading washing machines.
Yuck. As the Libertarian Party’s Steve Dasbach told the Conservative News Service, “The front loaders also don’t wash as well, can’t be opened during the wash cycle, and take longer to do the job. Because of those problems, 90 percent of washing machines currently sold in the USA are top loaders.”
As an owner of a top loading washing machine there’s now way I’d want to go with a front loading machine, but realistically at those prices I and many consumers wouldn’t have much choice.
But isn’t this going to save me a lot of money? Secretary of Energy Bill Richardson certainly says it will. According to him, “Consumers can expect to save over $200 in water and energy costs over the life of the product.”
Okay, maybe people who think they are getting good returns from their Social Security payments might find the thrill of saving $200 over the lifetime of their washing machine to be a good investment, but most normal people might realize that over the long term they’re actually losing money.
If it costs me $200 more for a front loading machine and I save $200 over say its 10 year life span, then I’m actually losing money since I’m even, but I could have taken that $200 that went to my washing machine and invested it in a relatively safe stock or mutual fund and gotten an annual rate of return of say 8 percent and then compounded that by reinvesting the return. Of course if I prefer the top loading model I’m really screwed.
Rather than going after appliances it would make more sense to simply make sure that consumers are paying the market price of the water they us, but in fact the governments’s explicitly helps price water below the market price. Numerous federal programs, for example, subsidize water usage in places such as Arizona and California by allowing farmers and others to buy water at well below market prices.
Richardson himself reveals how backward the situation is when he defends it by saying that in fact the rules are supported by appliance manufacturers who helped write the rules. This is an astounding admission in light of the government’s prosecution of Microsoft on antitrust violations. What do you call it when legislation is used to allow an industry to raise prices to consumers? That’s right, it’s a cartel that’s relying on the government to enforce its monopoly power.
Libertarians warn of ‘politically correct’ washing machines. Jim Burns, Conservative News Service, October 25, 2000.