Thursday, July 31, 2008

Colorado's "New Ice Cream Economy"

Politicians are fond of taking credit for good economic developments that generally are far beyond their power to control, even while discounting their influence when the economic news is bad. So I wonder if news that the Baskin-Robbins chain is planning a major expansion into the Denver metro area, possibly adding 60 new stores, will have Governor Bill Ritter taking credit for the “new ice cream economy” in Colorado.

After all, Ritter, although less than two years on the job, already takes credit for creating a “new energy economy” in the state, thanks to his support for alternative energy development. He's even been to Washington, D.C., to tell everyone there what a snap it was. But from what I see, it’s the “old” energy economy, centered on oil and gas development, that’s bringing jobs and revenue into the state. The "old" energy economy still seems firmly entrenched, judging from the dozens of long, heavily-laden, coal trains that chug through Colorado Springs each day, keeping the lights and air conditioning on in points south.

I just hope Ritter doesn't plan to pull the plug on Colorado's "old" energy economy prematurely, before the "new energy economy" is more in evidence. But that almost seems to be the plan, given the regulatory and rhetorical warfare he and other Democrats are waging on energy producers and their operations.

Ritter takes credit for renewable energy production quotas first approved by voters before he was elected (though, in a case of irrational exuberance, they were ratcheted-up by the legislature since he’s been governor), as well as federal subsidies and biofuel mandates he had nothing to do with. Without these mandates and subsidies -- without the heavy hand of government -- Ritter’s vaunted energy revolution would be going nowhere. And as is, despite all the hype, it's still a low wattage affair. In truth, Colorado's is a "Field of Dreams" sort of energy revolution: mandate it, claim it, take credit for it . . . . and it will happen.

But now let's compare the "new energy economy" to the "new ice cream economy."

Baskin-Robbins isn’t getting any subsidies to help bankroll its planned expansion into the state (as far as I know). No federal or state ice cream production or consumption mandates are in place to tilt the market in its favor. It isn't shaking down local communities for tax breaks or cold cash "incentives," as a condition for expansion. The company sees a promising market in the Denver area and will take the plunge. Its shareholders and employees and loyal customers will benefit if it’s betting correctly; they'll suffer if turns out to have been a bad move. Ice cream consumers and competitive forces, not politicians or energy panacea-pushers, will determine the outcome. The government's appropriate role is to provide a level playing field on which the ice-cream contest can be waged.

That’s how a real, free market economy works – which stands in stark contrast to the government-centered, politically-tainted, command and control model on which Ritter’s “new energy economy” is built.

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