Saturday, January 16, 2010

Blind Faith

Sometimes I get really annoyed with Denver Post columnist Vince Carroll. I guess it's a case of pundit envy.

He keeps writing the columns that I would be and should be writing, if only I had the time (and the skill). He did it again this week with a piece on New Energy Economics, a field of theory that has nothing to do with Real World Economics, as Carroll points out. But trying to reason with people on so-called "green energy" is like trying to get a Jihadist to join a kibbutz. It's a discussion, as Carroll point out, in which reason doesn't apply and trying to make sense is a waste of time.

Here's an excerpt:

"Maybe he needn't worry about making sense. A surprising number of Americans seem to believe the normal rules of economics and government investment don't apply to clean energy — that subsidies, for example, create more jobs than they destroy. Recently, when an Associated Press-Stanford University survey asked people whether policies to combat global warming "would cause there to be more jobs, fewer jobs or wouldn't affect the number of jobs," 40 percent said more jobs, 33 said "no effect" and only 23 percent said "fewer."

The most sensible answer — "government industrial policy is almost never an efficient way to allocate resources, so I'm guessing job growth will be slower as a result" — wasn't even an option.

Most commentators who support growing subsidies for clean energy dismiss the possibility that the money might do as much or more good invested, say, in other cutting edge technologies where the returns would be higher. Or, if they're like The New York Times' Thomas Friedman, they simply ignore the inevitable trade-offs. Friedman tirelessly promotes the idea that "building a clean-power economy" at government direction and support will make us "stronger, more innovative and more energy independent" — without ever asking the question, as George Mason professor Don Boudreaux points out, "compared to what?"

As Boudreaux explained on his blog, "How can Mr. Friedman be so sure that the benefits of windmills, solar panels, and battery-powered electric cars will exceed the costs of making — will exceed in value that which must be foregone to make — these green fetishes a reality?

"Of course, he cannot be sure. Not even close. Like so many other pundits, Mr. Friedman simply ignores, or arbitrarily discounts, the costs of turning his oh-so-lovely daydreams into quotidian actuality."

Last week, The Wall Street Journal's Jeffrey Ball reported that "government spending and price supports accounted for about one-third of the roughly $145 billion invested worldwide in clean energy in 2009 . . . ." Little wonder that under the Obama stimulus plan, "renewable energy producers are eligible for cash grants totaling 50 percent of the cost of projects they do this year — however high those costs go."

At what point does this gusher of subsidies become a scandal?"

Not any time soon, apparently.

It's not just the subsidies but the government mandates that are helping to prop-up an "industry" that can't stand on its own, an "economy" that makes no real market sense. Carroll points out that members of the Church of New Energy Economics, Colorado Chapter, are preparing to push for even higher statewide renewable energy production quotas this legislative session.

Heaven help the common ratepayers of Colorado if they succeed.

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