14 - Business, government, and public policy

Summary

The foregoing chapters tell the story of government intervention in energy markets for nearly 40 years. It is a saga, not of heroes and villains, but of ineffective institutions and administrative process. For readers convinced that big business contrived the energy crisis, the story must be disappointing. For those committed to theories of regulatory capture or public-interest reform, the story should be frustrating. And for managers, bureaucrats or others who would like to see a more effective industrial policy, the story should put the relationship of business to government in a critical perspective.

In this chapter, I offer my own conclusions regarding the government's record in energy policy, a few prominent views by others of the political economy, and some implications of this history for public economic policy.

Past policy – the record

There are any number of angles from which we can exercise the prerogatives of hindsight. All of them involve some degree of normative judgment. For example, we could contrast the government's energy policies to hypothetical alternatives that might have brought more desirable long-term results. We might compare inept implementation to the potential achievements of wiser legislators and bureaucrats. Or we could speculate how policy might have been were private interests not so self-interested. What I have settled for, however, is to consider how effectively government interacted with business in dealing with problems of market failure or public goods.

On the basis of these criteria, the government's domestic policies for fossil fuels generally failed.