by Nicolas Loris

Market, not subsidies, should determine the role of green energy in U.S. economy

The old adage "If it ain't broke, don't fix it" is one that does not apply to the government's investment in green energy. Subsidizing inefficient, expensive technologies is a broken policy that has a simple solution: Stop picking winners and losers in the energy sector and eliminate all subsidies.

The primary justification for investing in green energy is that those investments create green jobs. Government spending will "create" jobs in the sense that subsidies will allocate labor and capital to build windmills and solar panels. Plus, it looks good come election time when a member of Congress can point to that plant and tell his constituents he or she created those jobs.

But government "investments" take from one (by taxing or borrowing) and give to another. When the government gives money to build a windmill, those resources cannot simultaneously be used to build other products. At best, there's no new job creation but an extraction of resources from one sector of the economy to the politically preferred green sector. And since taxpayer dollars are subsidizing expensive, inefficient sources of energy, those resources could be used more efficiently in the private sector, and consequently, U.S. economic growth suffers on net.

No evidence exists to suggest that the government has better knowledge to make investment decisions or to commercialize technologies when the private sector chooses to bypass these opportunities. If there is a role for alternative sources in America's energy portfolio, it should be dictated by price and competition, not government handouts.

The energy market can be diverse and competitive without government interference.

 

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Competition, Not Handouts, Should Determine Role of Green Energy | Politics

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