Freedom Line Blog

Senik’s Law of Subsidies: Subsidizing any industry into existence requires destroying its more efficient competitors. And that, ladies and gentlemen, is the story of green jobs.

Luckily, the Obama Administration hasn’t been able to get its hands on the noose with which it intends to strangle the energy industry (I’m sorry … the industry that produces energy that actually works): that would be cap and trade. Thus, it’s had to settle for the silver medal of plowing money into “green jobs” that can’t balance the books without a chunk of your paycheck to stem the tide of red ink. The problem, of course, is that since conventional fuel sources like coal and petroleum are still the most feasible energy sources, the government is underwriting jobs that serve no discernible demand in the consumer market. Consider this passage from a story in today’s Washington Post:

With nearly 15 million Americans out of work and the unemployment rate hovering above 9 percent for 18 consecutive months, policymakers desperate to stoke job creation have bet heavily on green energy. The Obama administration channeled more than $90 billion from the $814 billion economic stimulus bill into clean energy technology, confident that the investment would grow into the economy’s next big thing.

What could go wrong? After all, if the administration is “confident”, there’s no reason to doubt, right? The Obama White House is know for nothing if not its clairvoyance (we’ll leave aside the question of why the “next big thing” would require subsidies). Oh, Mr. President, we hate to interrupt your dance with delusion, but reality would like to cut in:

The industry’s growth has been undercut by the simple economic fact that fossil fuels remain cheaper than renewables. Both Obama administration officials and green energy executives say that the business needs not just government incentives, but also rules and regulations that force people and business to turn to renewable energy.

Without government mandates dictating how much renewable energy utilities must use to generate electricity, or placing a price on the polluting carbon emitted by fossil fuels, they say, green energy cannot begin to reach its job creation potential.

Forget Afghanistan. Energy policy is the administration’s real parallel to Vietnam. We must destroy our energy sources in order to save them.

“For want of a nail the shoe was lost.  For want of a shoe the horse was lost.  For want of a horse the rider was lost.  For want of a rider the battle was lost.  For want of a battle the kingdom was lost.  And all for the want of a horseshoe nail.”

Today’s lesson in unintended consequences comes from an article that covers several flash points threatening to engulf a relatively peaceful Iraq into renewed chaos.  One item shines brightest.

The Iraqi government can’t provide more than 4 to 6 hours of electricity a day to most of its citizens.  With local temperatures many degrees over 100, people are rioting because of it.

Consider what they’re not rioting about: the escape of four convicted terrorists from prison; a five month delay in forming a coalition government to lead the nation; suicide bombings that killed 50 people; a stalemate in deciding how to divide the country’s oil revenues.

And yet what’s the issue that caused people to “smash government offices” and demand change?  Keeping the electricity running.

Ideas like liberty, commerce and opportunity don’t get a lot of attention when basic services like relief from oppressive heat aren’t being delivered.

The sooner the terrorists inside Iraq figure out that merely being a competent public administrator will probably be enough to get democratic control of the national government, the sooner the Arab world’s only experiment in democracy will cease.

All for want of a steady supply of energy.