They’re Asking For It

One of the most popular arguments against government “intervention” in alternative energies and the green economy is that government regulations are always inefficient, they slow the natural progress of the economy, markets work best when they’re totally unfettered, etc. Stuff like that. The jatropha-in-Myanmar post a couple of days ago might even lend that argument some support.

But the capitalism-loving, -touching, and -squeezing heads of huge companies like BP, GE, and Dow Chemical disagree- they’re urging the government to come up with a coherent energy policy that favors energy efficiency, clean fuels, and even carbon taxes. They contend that the piecemeal regulations the Bush administration half-heartedly doles out are costing America jobs, and US companies the chance to compete internationally. Apparently, since European countries tend to take alternative energies like nuclear and wind seriously, their governments have created favorable investment climates around those technologies- and the clean tech money is settling abroad.

GE’s Chief Executive Jeff Immelt makes a case for government subsidies, carbon trading, and investments in clean technology from a purely business standpoint- and to the free-market crowd, he has a response. From the WSJ’s “Environmental Capitol” blog:

And government largess helps drive progress—like in GE’s aircraft engine division half a century ago. That admission riled free-market types in the audience (and on stage) who took him to task for subsidy-hunting and accused him of—gasp—betraying his capitalist credentials.

“Don’t worship false idols,” he countered. “The government has its hand in every industry. If we have to have them, I’d prefer they were productive rather than destructive.”

Defending the “free” market is quixotic in the most literary sense, as the pure market is the pure Dulcinea: entirely a product of fevered imaginations. I’ve ranted about it here before, but observe that very successful capitalists realize this, and gamely play the market (and government) by the existing rules. There’s money to be made in clean technology (even capitalists who think global warming is a fraud know this and invest accordingly), and there would be even more of it if the US government stopped noodling around.

Last month, BusinessWeek reported on how the Bush Administration’s failure to lead on clean energy policies has left it to the states to invent their own. The magazine pointed out that a sustained federal push was essential for bringing the US up to speed in a clean tech economy already dominated by foreign companies- but not to hope for that push from Mr. Bush.

Maybe next year your dreams will come true, practical capitalists.

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6 Responses to “They’re Asking For It”


  1. 1 Steve Rosenbaum March 17, 2008 at 10:35 pm

    There’s actually another question to ask about GE and the others. Do they stand to make billions when government gets involved? As government gets involved they do tax credits, subsidies, grants and big contacts. Who gets them? Big business.

  2. 2 virescent March 17, 2008 at 10:44 pm

    Yes, they’ll make millions- and if they make millions by providing products and services that are environmentally sound, then I’d much rather they do that than what they’re doing now.

    I’m with you, Big Business makes me itchy most days, but there’s no good to be done by preventing businesses from making money. That’s what they’re best at, and a stable, growing, sustainable economy will go a long way towards fixing related environmental problems- poverty, for one.

    I’d rather they have incentives to do smart things, so I can have consumer choices that are acceptable to me, than for them to continue to run “business as usual”.

  3. 3 CM March 18, 2008 at 5:18 pm

    Oh come now, at this point big companies only love capitalism when its in their best interest. The companies see which way the political winds are blowing and want government regulation because it helps them. These types of regulations prevent newer, smaller companies from competing, to the sole benefit of the large companies you mention. By creating these regulations we leave ourselves unable to benefit from the new ideas of other companies and our left only with the options provided by the companies that got us here.

    You are correct in saying that a truly free market doesn’t exist, but that is no reason to constrain the market further.

  4. 4 Mrcalculo March 18, 2008 at 6:37 pm

    I believe that our lower level of support for alternative energy probably means that jobs in this arena are going overseas. Why is this a bad thing, or even surprising? If some country wanted to extensively subsidize the production of spoons, then I assume they would on balance attract spoon producing jobs from places not subsidizing the activity. However, this does not mean it would behoove us to subsidize spoons! It also does not mean they are better off for stealing our spoon-jobs, since the resources they use to subsidize must come out of production elsewhere.

    Also, calling for clearer regulations is not the same as calling for more regulation. I agree with the above posts that to some degree business likes regulation when it helps shield them from competition. But a further point is made in the quote by Immelt. As long as there is going to be regulation, at least it should be as efficient as possible. This is very different than saying there should be more regulation or intervention.

  5. 5 virescent March 19, 2008 at 4:23 pm

    CM- Ah, the crazy contradictions of capitalism! Of course they only want to be capitalists when it gives them an advantage- capitalists take advantage of their advantages. I don’t understand why you generalize government regulation that big business wants as always shutting out small business. They’re asking for new energy subsidies and tax breaks- how does that prevent small businesses from entering the market? In the relatively new market for alternative energy- with no well developed technologies but nuclear- small innovative companies will have an advantage made even greater by subsidies for their products. Sure, Big Business has the advantage of being big, but that’s true no matter what kind of regulations are written.

    And I don’t agree that in order to keep the market “as pure as possible” we should cease regualting it from now on….starting…now! It’s not the way the rest of the world manages their economy, and we have to compete there. Plus, I think that government, properly managed, can do good things for economies and societies. You may argue whether this government is properly managed and has any capability of doing good, sure, but I’d say that if not, we must change that, and not just hope it stops fiddling with things and goes away.

    Calc- Since your regulation point coincides with CM’s, let me make my point clear: I’m not for regulations that are ridiculous or poorly planned, and anyone who is needs to go take a nap. Efficient, helpful government regulation, hoorah. And there are lots of chances for govt to make helpful, efficient regulations that will boost the American economy, since right now they have a tiny number of random and unhelpful regulations.

    As for the spoon example, I’d argue that the production of energy, location and control of, is way more important that the production of spoons, location and control of. Foreign control of energy supplies is a bad idea, since an Economy must operate alongside Politics. Plus, I enjoy having at least some Americans employed, so they can actually afford to buy all that stuff that’s so much cheaper to make everywhere else.

    Though if it happened as in your story, I think this government might actually subsidize spoon makers, after a few usa today stories on inferior foreign spoons and dangers to our soup supply and whatnot. (example of unhelpful regulations I might not support, but then again I have plenty of spoons already.)

  6. 6 Cameron March 20, 2008 at 5:43 pm

    Quick and silly point. Trade agreements that give breaks, incentives, what have you to agreed countries have done more to keep wages low in poor countries as well as our country, drive the price of products up do to import, remove jobs from our country, and continue the exploitation of other countries with lower pollution, child labor laws, etc. You don’t get something for nothing. There are plenty of very smart people in Washington who have very well thought out plans to make “big business” subsidies/regulations work……they just haven’t been listened to in 8 years. All hail the might lobbying dollar!! I’ll take my foreign made spoon dipped in foreign made soup with NO antifreeze or poisoned heparin thank you!!!


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