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Appliances Contribute to Human Progress—but Regulations Threaten Their Affordability

Blog Post | Cost of Technology

Appliances Contribute to Human Progress—but Regulations Threaten Their Affordability

The environmentalist regulatory agenda is targeting life-saving home appliances.

Summary: Home appliances have drastically improved human life, from preventing heat-related deaths with air conditioning to making household tasks more efficient with washing machines and refrigerators. Initially luxury items, many appliances have become affordable and accessible to most households thanks to free-market innovation. However, regulations driven by environmentalist ideology now increasingly threaten the affordability and accessibility of these essential devices, particularly for the lower-income families who need them most.


Human Progress has devoted a considerable amount of attention to home appliances—and for good reason, given the tremendous difference they have made in our lives. Whether it is the heat-related deaths averted by air conditioning, the foodborne illness prevented by refrigeration, the improvements in indoor air quality enabled by gas or electric stoves, or the liberation of women worldwide facilitated by washing machines and other labor-saving devices, these appliances have improved the human condition considerably over the past century or so.

Of course, the benefits of home appliances accrue only to those who can afford them, and on that count, the trends have been very positive. Although many appliances started as luxury items within reach of no more than a wealthy few, they didn’t stay that way for long. For example, the first practical refrigerator was introduced in 1927 at a price that was prohibitive for most Americans, but by 1933, the price was already cut in half, and by 1944, market penetration had reached 85 percent of American households.

Other appliances have similarly spread to the majority of households, first in developed nations over the course of the 20th century and now in many developing ones. And the process continues with more recently introduced devices, such as personal computers and cellphones. Cato Institute adjunct scholar Gale Pooley has extensively documented the dramatic cost reductions for appliances over the past several decades. The reductions are especially striking when measured by the declining number of working hours at average wages needed to earn their purchase price. For example, the “time price” of a refrigerator dropped from 217.57 hours in 1956 to 16.44 hours in 2022, a 92.44 percent decline.

Home appliances are a free-market success story. Virtually every one of them was developed and introduced by the private sector. These same manufacturers also succeeded in bringing prices down over time, all while maintaining and often improving on quality.

If left to the same free-market processes that led to the development and democratization of these appliances, we would expect continued good news. Unfortunately, in the United States and other countries, many appliances are the target of a growing regulatory burden that threatens affordability as well as quality. Much of this is driven by an expansive climate change agenda that often supersedes the best interests of consumers, including regulations in the United States and other nations that could undercut and possibly negate the positive trends on appliances in the years ahead.

Air Conditioners

Many appliances are time-savers, but air conditioning is a lifesaver. According to one study, widespread air conditioning in the United States has averted an estimated 18,000 heat-related deaths annually. Beyond the health benefits, learning and economic productivity also improve substantially when classrooms and workplaces have air-conditioned relief from high temperatures. Yet air conditioning is often denigrated as an unnecessary extravagance that harms the planet through energy use and greenhouse gas emissions. As a result, air conditioning faces a growing list of regulations, the cumulative effect of which threatens to reverse its declining time price.

In particular, the chemicals used as refrigerants in these systems have been subjected to an ever-increasing regulatory gauntlet that has raised their cost. This includes hydrofluorocarbons (HFCs), the class of refrigerants most common in residential central air conditioners. HFCs have been branded as contributors to climate change and are now subject to stringent quotas agreed to at a 2016 United Nations meeting in Kigali, Rwanda. The United States and European Union also have domestic HFC restrictions that mirror the UN ones. These measures have raised the cost of repairing an existing air conditioner as well as the price of a new system.

The regulatory burden continues to grow, including a US Environmental Protection Agency requirement that all new residential air conditioners manufactured after January 1, 2025, use certain agency-approved climate-friendly refrigerants. Equipment makers predict price increases of another 10 percent or more. Installation costs are also likely to rise since the new refrigerants are classified as mildly flammable, which necessitates several precautions when handling them.

Concurrently, new energy efficiency requirements for air conditioners also add to up-front costs. For example, a US Department of Energy rule for central air conditioners that took effect in 2023 has raised prices by between $1,000 and $1,500. This unexpectedly steep increase will almost certainly exceed the value of any marginal energy savings over the life of most of these systems.

The cumulative effect of these measures is particularly burdensome for low-income homeowners and in some cases will make a central air conditioning system prohibitively expensive.

Refrigerators

Refrigerators are technologically similar to air conditioners and thus face many of the same regulatory pressures, including restrictions on the most commonly used refrigerants as well as energy use limits. Fortunately, refrigerators have come down in price so precipitously that the red tape is less likely to impact their near universality in developed-nation households. However, for a developing world where market penetration of residential refrigerators is still expanding, the regulatory burden could prove to be a real impediment.

In addition to environmental measures adding to the cost of new refrigerators, the international community is also targeting used ones. Secondhand refrigerators from wealthy nations are an affordable option for many of the world’s poorest people. For millions of households, a used refrigerator is the only real alternative to not having one at all. However, activists view this trade as an environmental scourge and are taking steps to end it.

Natural Gas-Using Appliances

Several appliances can be powered by natural gas or electricity, particularly heating systems, water heaters, and stoves. The gas versions of these appliances are frequently the most economical to purchase, and they are nearly always less expensive to operate given that natural gas is several times cheaper than electricity on a per unit energy basis. However, natural gas is a so-called fossil fuel and thus a target of climate policymakers who are using regulations to tilt the balance away from gas appliances and toward electric versions. A complete shift to electrification has been estimated to cost a typical American home over $15,000 up-front while raising utility bills by more than $1,000 per year.

The restrictions on gas heating systems are the most worrisome example, especially since extreme cold is even deadlier than extreme heat. Residential gas furnaces have been subjected to a US Department of Energy efficiency regulation that will effectively outlaw the most affordable versions of them. And many European nations have imposed various restrictions on gas heat in favor of electric heat pumps that are far costlier to purchase and install.

There are more examples of home appliances subject to increasing regulatory restrictions. Indeed, almost everything that plugs in or fires up around the home is a target, justified in whole or in part by the need to address climate change. The cumulative effect of these measures poses a real threat to the centurylong success story of increased appliance affordability.

E&E News | Energy Production

BLM Approves Geothermal Project, Moves to Ease Permitting

“The Bureau of Land Management issued a decision record approving the Cape Geothermal Power Project in southwest Utah, which would have the capacity if fully built to generate 2,000 megawatts of electricity, which is enough to power about 2 million homes.

The Interior Department also said it is proposing a new categorical exclusion that would streamline the process to evaluate and approve ‘geothermal resource confirmation operations’ of up to 20 acres. These could include drilling wells that would be used to to confirm the existence of a geothermal resource, the agency said.

The goal is to ‘accelerate the discovery of new geothermal resources throughout the West,’ and particularly in Nevada, which the agency says is ‘home to some of the largest undeveloped geothermal potential in the country.'”

From E&E News.

Axios | Air Transport

Feds OK Rules for US To Begin Electric Air Taxi Service

“The Federal Aviation Administration on Tuesday Issued Long-Awaited Rules That Will Help Pave the Way for the Commercialization of Electric Air Taxis as Soon as Next Year…

Driving the News: FAA Administrator Mike Whittaker Announced the Final Regulation During a Speech at a Business Aviation Convention in Las Vegas.

  • It Includes Qualifications and Training Requirements for Pilots of These New Aircraft Which Have Characteristics of Both Airplanes and Helicopters.
  • The Rule Also Addresses Operational Requirements, Including Minimum Safe Altitudes and Required Visibility.
  • The Rule Is ‘The Final Piece in the Puzzle’ for Safely Introducing These New Aircraft to the u.s. Airspace, He Said.’”

From Axios.

Blog Post | Communications

Digital Technology and the Regulatory State | Podcast Highlights

Chelsea Follett interviews Jennifer Huddleston about the benefits of digital technologies as well as how we should think about the risks and problems they pose.

Read the full transcript or listen to the podcast here.

We hear so much about the risks and downsides of technology. What are some areas where you believe digital technologies have improved our lives?

There are so many areas that we’ve seen transformed by technology over the last decade. Think about when we were faced with the COVID-19 pandemic, and so much of our lives shifted to our homes. Now imagine if that same thing had happened in 2010. How different would that have been? How much more limited would the options have been to stay connected to friends and family, entertain yourself at home, and continue your education and job?

Because the US has maintained a light-touch regulatory approach to the technology sector, we empowered entrepreneurs to create products that benefit consumers, sometimes in ways that we never could have imagined. I still remember the days when you had to have atlases in your car. And I remember when MapQuest seemed like such a huge deal. Now, if you’re going somewhere new, you often don’t even look it up in advance.

I’m hearing a lot of calls for more regulation of digital technologies. President Biden is saying we need to clamp down on AI, while Nikki Haley has said we must deanonymize social media. What are some of the dangers of over-regulating these technologies?

I’m going to start by asking you a question. How often do you think you use AI?

When it comes to ChatGPT, every few days. But I’m sure that what you’re hinting at is that AI is incorporated into far more than we’re even aware of.

Exactly. Most of us have been using AI for much longer than we realize. Search engines and navigation apps use AI. If you’ve ever tried to do a return and interacted with a chatbot, some of that is possible because of advances in AI. We’ve also benefited from AI in indirect ways. For example, AI can be used to help predict forest fires and to assist in medical research. Because AI is such a general-purpose technology, a lot of the calls for regulation may lead to fewer of those beneficial applications and could even make it harder to use many of the applications we’re already used to.

Oftentimes, people just don’t think about the consequences of regulation. When we think about an issue like anonymous speech, many people immediately jump to their negative experiences with anonymous trolls online. But we should also think about the costs of deanonymizing speech. Think about dissidents trying to communicate with journalists or people trying to alert each other to social problems in authoritarian regimes. Anonymous speech is incredibly valuable to those people, and we have a long-standing tradition of protecting that kind of speech in the US. When we look at creating backdoors or deanonymizing things, that’s not just going to be used for going after the bad guys. It’s also going to be exploited by a whole range of bad actors.

And this country was arguably founded on a tradition of pseudonymous and anonymous speech; think of the Federalist Papers.

Right.

What do you think is driving this distrust of new technologies?

Disruptive new technologies like social media and artificial intelligence are naturally going to make us uncomfortable. They create new ways of doing things and force societal norms to evolve. This is something that happened in the past, for example, with the camera. We’re now used to having cameras everywhere, but we had to develop norms around when, where, and how we can take pictures. With AI, we’re watching that process happen in real-time.

The good news is that we’re adapting to new technologies faster than ever. When you look at the level of adoption of technologies like ChatGPT and the comfort level that younger people have with them, innovations seem to be becoming socially acceptable at a much quicker pace than in the past.

The current technology panics are also not unique to the present. We’ve seen a lot of concern about young people and social media recently, but before that, it was young people and video games, and before that, it was magazines and comic books. We even have articles from back in the day of people complaining that young people were reading too many novels.

There’s also this fear of tech companies having too much market share. Can you walk us through that concern and provide your take on it?

I’m sure you’re talking about Myspace’s natural monopoly on social media. Or maybe you’re talking about how Yahoo won the search wars. These were very real headlines 20 years ago with a different set of technology giants. So, my first point is that innovation is our best competition policy.

My second point is that before we implement competition policy, we need to figure out why big companies are popular. If a company is popular because it’s serving its consumers well, that’s not a problem; that’s something we should be applauding. When we think about incredibly popular products like Amazon’s Prime program, people choose to engage with it because they find it beneficial.

We should really only want to see antitrust or competition policy used if anti-competitive behavior is harming consumers. We don’t want a competition policy that presumes big is bad. And we certainly don’t want to see competition policy that focuses on competitors rather than consumers. We don’t want a world where the government dictates that the Model T can’t put the horseshoe guys out of business.

People of all stripes want to restrict how private companies moderate content. People on the left are concerned about potential misinformation online, while those on the right worry about political bias in content moderation. What’s your take on this issue?

Online content moderation matters for a lot more than social media. We often think about this in the context of, “Did X take down a certain piece of content or leave up a certain piece of content?” But this is actually much bigger. Think about your favorite review site. If you travel and you’re going to a new place and looking for somewhere to stay or go to dinner, you’re probably going to go to your favorite review site rather than read what some famous travel reporter has said.

The review sites allow you to find reviewers with your same needs. Maybe you’re traveling with young children, or you have someone with dietary restrictions. This is something that only user-generated content can provide. But what about bad or unfair reviews? What happens when someone starts trying to get bad reviews taken down? We want these sites to be able to set rules that keep reviews honest, that keep the tool useful, where they’re not being overrun by spam, and they aren’t afraid of a lawsuit from someone who disagrees with a review.

This is one example of why we should be concerned about these online content moderation policies. When it comes to questions of misinformation, I think it’s important to take a step back and think, “Would I want the person I most disagree with to have the power to dictate what was said on this topic?” Because if we give the government the power to label misinformation and moderate content, the government will have that power whether or not the people you agree with are in charge. So not only do we have First Amendment concerns here in the US from a legal point of view, but we should also have some pretty big first principles concerns regarding some of these proposals.

That’s a good segue into another concern a lot of people have with new technology, which is its effect on young people. What do you make of those concerns?

Youth online safety can mean so many different things. Some people are concerned about how much time their child spends online. Some people are concerned about issues related to online predators. Others are just concerned about particular types of content that they don’t want their children exposed to. The good news is we’ve seen the market respond to a lot of these concerns, and there are a lot of tools and choices available to parents.

The first choice is just when you allow your child to use certain technology. That’s going to vary from family to family. But even once you’ve decided to allow your child to have access to a device, you can set time limits or systems that alert you to how the child is using the device. There, we have seen platforms, device makers, and civil society respond with a great deal of tools and resources for parents. To reduce harm to children, we should look to education rather than regulation. We need to empower people to make the choices that work best for them because this isn’t going to be a one-size-fits-all decision, and policy intervention will result in a one-size solution.

Many people are also concerned about privacy. Whenever there is a large gathering of data, that data can be leaked to the government or to bad actors. How should we think about data privacy?

When we talk about privacy, I think it’s important to distinguish between the government and private actors. We need very strong privacy protections against government surveillance, not only for consumers but also for the companies themselves, so that they can protect their consumers and keep the promises they’ve made to consumers regarding data privacy.

When it comes to individual companies, we need to think about the fact that there are a lot of choices when it comes to data privacy, some of which we don’t even think are data privacy choices.

One example is if you go to a website and sign up for a newsletter in order to get a ten percent off coupon, you’re technically exchanging a bit of data, such as your email address, for that 10 percent off coupon. You get a direct benefit in that moment. That’s a privacy choice you make. If we think about privacy as a choice, we start to see that we make these choices every day. Even where we choose to have a conversation is a data privacy choice.

The other element when it comes to data privacy is that an individual’s data, while we deeply care about it, is not actually that valuable. What’s been valuable is how data can be used in the aggregate to improve services. So, when we hear that we should just treat data like any other piece of property, it doesn’t necessarily work because data doesn’t act like other forms of property in many cases. Not only is the value of the data not tied to a single data point, but the data also is often not tied to a single user. This makes regulating data privacy very complicated. If you and I are in a picture together, whose data is that? Is it the person who took the picture’s or people in the picture’s? Or does it belong to the location we were in while taking the picture? Can you invoke a right to be forgotten that removes the picture? And if so, then what does that do to the person who took the picture’s speech rights? These are not easy questions, and they’re often better solved on an individual basis than with a one-size-fits-all approach.

The Human Progress Podcast | Ep. 53

Jennifer Huddleston: Digital Technology and the Regulatory State

Jennifer Huddleston, a senior fellow in technology policy at the Cato Institute, joins Chelsea Follett to discuss the benefits of digital technologies as well as how we should think about the risks and problems they pose.