The subsidy crutch

The subsidy crutch

June 6th, 2012 in Opinion Free Press

Priming the pump.

That's the dubious term used to describe government's attempts to create public acceptance of some fledgling product or technology that hasn't managed to become especially profitable on its own. In theory, with enough government funding and promotion of said product, the American people eventually will accept the product and buy it freely.

It sounds innocuous enough. Yet it turns the free-market ideal on its head. It presumes that when the American people do not willingly purchase a consumer good that lawmakers deem valuable, government should make them do so anyway -- by using their tax dollars to subsidize the manufacture or sale of that product.

Hence, Washington has spent billions upon billions of tax dollars on corn-based ethanol, for instance, because there just wasn't "enough" public interest in buying a product that can damage small engines, reduce mileage and drive up food costs.

The process went like this:

• Washington wanted us to use more ethanol.

• We voted no with our discretionary dollars.

• Washington said "Too bad" and seized our tax dollars to produce and promote ethanol anyway, since we couldn't see fit to cooperate.

Neat, huh?

The same process has played out in solar power. Solar is vastly more expensive to produce than traditional forms of energy. Not surprisingly, therefore, consumers shy away from it in droves -- when they have the choice to do so.

But Congress and many state governments deem solar more environmentally worthy, so they require us all to support the industry with an array of tax-funded "incentives" and subsidies. You know: that whole "priming the pump" thing again.

You may have read in the Times Free Press about a local solar equipment maker, Lectrus, that is adding 30 jobs after a big expansion in 2011.

That's great for those employees. We wish them and the company only the best.

But when you read deeper into the article, it notes, "The solar industry has seen rapid growth over the past several years, benefiting from federal grants and utility incentive programs such as the Tennessee Valley Authority's energy buyback program."

That's wonderful for solar companies, their workers and the handful of consumers who buy subsidized solar products that would otherwise be much more expensive. But it's a raw deal for the rest of us.

Moreover, it doesn't count as real economic growth, because it's not supported strictly by market demand but in considerable part by the subsidy crutch.

Most of us said "No" to solar power with that portion of our income that government allows us to keep. And no is what we meant.

But when it comes to promoting costly green energy, government can't seem to take no for an answer.