This was originally posted on PoodleRose on August 28, 2013. Comments have not been migrated.
For decades, politicians have promised us a variety of clean, cheap energy sources. Darren Goode details a few of this on Politico. From cellulosic ethanol to nuclear power, past promises have fallen short. But Goode doesn’t really tell us why these promises have not come true.
Every example cited by Goode has a common element: government subsidies in one form or another.
The history of failed government “investments” is no secret. From the bankruptcies of the subsidized transcontinental railroads to more recent failures in “green” energy, such as Solyndra, government subsidies breed incompetence and inefficiency. With taxpayers footing the bill, subsidized companies have little incentive cut costs and actually produce a marketable product.
It is easy for politicians to make grand promises and then throw billions of dollars at their cronies. And it is just as easy for the cronies to nod in agreement at the promises, build a wonderful new factory, fail to produce anything of value, and ultimately go bankrupt. That has been the history of government subsidies.
In his book, The Myth of the Robber Barons, Burton Folsom describes what he calls “political entrepreneurs”: those who try to “succeed primarily through federal aid, pools, vote-buying, or stock speculation.” These are individuals who put their effort into courting favor with politicians, rather than developing an efficient productive business. Unable to raise sufficient capital from voluntary investors, they must turn to government to force taxpayers to “invest” in their scheme.
In contrast are what Folsom calls “market entrepreneurs,” individuals “who usually innovated, cut costs, and competed effectively in an open economy.” These men obtain their financing from willing investors, and their success is determined by their ability to provide needed goods and services to willing consumers.
The reason that alternative energies continue to fail is government intervention. Subsidies misdirect capital. Regulations stifle innovation. Get government out of the way and allow energy innovators and entrepreneurs to operate freely. Then, and only then, will we have cheap, clean, and abundant energy.