The following article originally was published January 11 by the Independence Institute. The Institute’s Jon Caldara offered additional commentary. The article also was published by Denver Daily News and Colorado Daily.
If you think corporate welfare “creates jobs,” you might be an outgoing Colorado governor.
As governor, Bill Ritter signed “an unprecedented 57 clean-energy bills into law,” a January 5 release from Colorado State University reviews. Now Ritter will join the university’s Center for the New Energy Economy, drawing a privately funded $300,000 annual salary.
Whether wind and solar energy actually can significantly reduce carbon emissions remains debatable. The online news source Face the State recently reported that an $11 million “new energy” project in Fort Collins actually relies partly on dirty diesel. The irregularity and wide dispersion of wind and solar energy make them difficult to harness.
But advocates of the “new energy economy” do not merely claim that alternative energy reduces carbon emissions. They claim it benefits the economy as well. Such claims about the alleged economic benefits of “new energy” rest on basic economic fallacies.
In a free market, consumers turn to new energy sources when they offer lower costs and better quality than the competition. For example, in the late 1800s consumers turned from whale oil to the “new energy” of petroleum. Advances in nuclear power or some other energy source may in turn largely replace coal and oil without political interference.
Political interference in the market is precisely what Ritter advocates, and that is why his policies harm the economy rather than help it. Ritter’s “new energy economy” relies on a combination of political controls and corporate welfare that raise your energy bills and your taxes.
Last year Ritter signed a bill “requiring that 30 percent of electricity be generated from renewable sources by 2020,” a release from the governor’s office notes. The fallacy is that the bill “will create thousands of new jobs.”
Ritter’s claims about jobs rest on what 19th Century French economist Frederic Bastiat called the “childish illusion” that such measures do anything other than reallocate wealth and wages. Bastiat urges us to consider the unseen as well as the politically obvious. Ritter’s controls will destroy jobs in the oil and coal industries, and they will destroy jobs that consumers would otherwise finance, if they weren’t paying higher energy costs.
Another document from the governor’s office claims, “Ritter’s vision and strategies are helping to create and save jobs, support small businesses, increase manufacturing and spur innovation.” The document lists various businesses subsidized by the state, including Vestas Blades, IBM, and Abound Solar. Ritter conveniently neglects to mention the costs.
Corporate welfare does not just fall from the sky. It comes from taxpayers. That money is no longer available to those who earned it to create jobs and support businesses in other sectors. While Ritter creates jobs with one hand, he destroys them with the other. The difference is that the jobs Ritter creates serve political interests rather than the interests of consumers.
Consider, as Bastiat might do, the logical absurdities of Ritter’s position. If mandating “new” energy creates jobs, then why stop at 30 percent? Why not 100 percent? Why not expand subsidies 1,000 fold? Why not outlaw all coal, oil, and natural gas in Colorado, and force every property owner to install solar panels and windmills? Think of all the new jobs that would require!
Of course, Ritter could argue that, insofar as he has attracted federal funding for “new energy,” he has helped forcibly transfer wealth and jobs from citizens in other states to citizens in Colorado.
But that would seem to be a losing game. Last year the Denver Business Journal noted that “Colorado ranked 33rd among the 50 states in the amount of per-capita federal spending.” If Ritter can “create jobs” in Colorado by bilking the citizens of other states, then politicians elsewhere can do the same to us. The net result is not more jobs, but more political favoritism and more economic waste.
Ritter’s “new energy economy” is built on old economic fallacies about the alleged benefits of central planning and corporate welfare. For productive employment, we should instead turn to a subsidy-free New Liberty Economy that favors free markets and rewards companies that seek to please customers instead of politicians.
Ari Armstrong, a guest writer for the Independence Institute, publishes FreeColorado.com and moderates Liberty In the Books.