Tuesday, May 1, 2012

Government Subsidies and the Global Warming Bubble

Notable & Quotable is a short commentary about global warming and government efforts to limit its generally assumed effects:

"We are in the middle of what you might call a global warming bubble. It is a failure of the global warming theory itself and of the credibility of its advocates, but also a failure of the various "green energy" schemes proposed as a substitute for fossil fuels.
Take the sleek Tesla electric roadster, brought to you with about half a billion dollars in government-backed loans, which turns into an immovable "brick" if you run down its battery too far, say, by taking a long drive and parking it for a while.
The failure of the solar panel maker Solyndra has been followed by the bankruptcies of a variety of other government-subsidized green energy firms, such as Beacon Energy, which makes an energy storage device needed to smooth out the energy production of erratic "renewable" sources, and battery maker Ener1.
But maybe we're just not subsidizing green power enough, because surely you've heard—probably from Tom Friedman—that China is beating us to the future with its support for green energy. But China's solar energy firms are also heading into a slump and laying off workers. Part of the reason for the solar slump in China is that they were counting on generous subsidies for their product from the West, particularly Europe. In effect, the Chinese were manufacturing solar panels in order to cash in on subsidies from Western taxpayers. But now the subsidies are drying up."
Discussion and Analysis
Subsidies take money from one and give to another. If there's no money to give, there's no subsidy. Seems like Europe is beginning to slow down subsidizing wasteful government projects. Maybe there is hope for the U.S. politicians as well, now that our financial mess is in high gear and highly visible to taxpayers, too. Let's hope so.
In addition to the above enumerated wasteful government expenditures, let's not forget some other recent examples involving wind and solar power, ethanol and the Chevy Volt.
Of course, the Keystone XL pipeline postponement and preventing onshore and offshore drilling, both for oil and natural gas, ranks high on the hit parade as well. As does the negativism toward coal and nuclear energy.
And although perhaps a slight stretch, the Postal Service needs to be included on the list of government subsidies doing much harm as well, as taxpayer financed transportation and related equipment consumes lots of fossil fuel needlessly. E-mail is much quicker and cheaper, too.
Financial subsidies granted by government officials are almost always mistakes and represent OPM spending at its worst. I say that OPM green spending is the worst, since it's based on a dream and not a realistic payback plan.
In simple terms, subsidies don't work because they're not subjected to the discipline of a entrepreneurial potential risk taker deciding whether or not to invest in a project which may or may not prove to be successful. When the government OPM is involved, the possibility or even likelihood of losing taxpayers' money is not especially worrisome to organizations like the Sierra Club and sponsoring government officials.
Markets will work their magic if participants are allowed to compete on equal grounds. And taxpayers can simply sit by and watch the action. Or ignore it if they so choose, since taxpayer money is not at risk.
But when government decides to favor one competitor or faction over another, a fair game of competition isn't possible. As a result, many otherwise would-be competitors decide not to enter the fray when government's in the game.
Then We the People will never know what could have been.
Politicians will never learn to stay away from frivolous subsidies until taxpayers teach them to stay away from free markets.
At least that's my view. And when we run out of money, or come close enough thereto, that time will arrive. It's getting closer each day.
Thanks. Bob.