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A Superfluous Man: Subsidies slow green energy growth

Every week it seems I hear about some event demanding a greater investment toward green energy, be it government subsidization of green technology or demanding the university adopt more green technology.

The proliferation of green technology would be great; I’m behind that one hundred percent. However, government investment in green technology produces nothing but waste and stifles innovation in the green industry.

Advocates for green energy investment gloss over a few important points: Job creation is not synonymous with wealth creation, government investment is another form of corporate welfare and government investment is usually, if not always, inefficient.

When the government subsidizes green energy projects, it’s rarely to the benefit of a small start-up with an innovative technique for the industry. More likely, the subsidies deposit in the bank accounts of billionaires and corporations such as T. Boone Pickens, General Motors and British Petroleum, to name a few.

These subsidies, to an extent, insulate companies from market conditions, giving them an advantage over competitors who must respond to market conditions.

As a result, green companies cannot stay competitive and innovate to create cheap and efficient alternative energy sources against large, subsidized companies.

The companies who respond quicker and better to market demand suffer while subsidized companies prosper at the expense of society.

As Tim P. Carney recently wrote, “Environmental policy is not driven by tree-hugging activists, earnest liberal bloggers or ecologically minded citizens.

Instead, it flows from the lobbyists and executives of well-connected multinational corporations and built-for-subsidy startups that see profit in the loan guarantees, handouts, mandates and tax credits Congress creates in the name of saving the planet.”

For every dollar the government spends in green investment, it removes a dollar from private consumption and investment.

When individuals unwisely spend or invest a dollar, they have a strong incentive to correct their behaviors so as to get an efficient return; in other words, they have economic incentives to wisely allocate their resources.

However, when the government spends and invests, any economic incentive is secondary to a political incentive that encourages spending for the greatest political return.

For example, Jim F. Couch and William F. Shughart, in their book The Political Economy of the New Deal, analyze New Deal spending and found that a state’s support for FDR and its importance in his Electoral College strategy were consistently significant factors in its level of aid.

Some might say this is a benefit of political action: It isn’t chained to economic reality. Indeed. What such an opinion ignores is that malinvestment wastes resources — resources that could have been used to pay bills, invest in a new business or repair deteriorating infrastructure.

When the Pentagon wastes $70 billion, as a late March audit demonstrated, $70 billion isn’t financing a school system or invested in a child’s college education.

A government isn’t a social construction utilized to respond to strictly economic pressures. If it were, it would be a market. But, the desirability of something (sustainable, green energy) doesn’t obscure the fact that a political system isn’t efficient and might impede desirable economic growth.

More than anything, the abolition of subsidies to coal and oil companies, coupled with lower entry costs into the green energy market by removing bureaucratic requirements and taxes, will spur innovation and a greener future.

Anthony Hennen is a junior studying journalism and a columnist for The Post. Do you think the government should invest in blue technology instead? Email Anthony at ah316808@ohiou.edu.

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