Denver Post and NREL, Meet Bastiat

Let’s play the game of “spot the economic fallacies” in today’s editorial by the Denver Post, which essentially advocates corporate welfare. (This follows a slanted news story on the same topic.)

The Post claims that the tax-funded National Renewable Energy Laboratory in Golden has created “efficient” solar film, windmill blades, and office buildings. What’s the fallacy? A more technically “efficient” gadget is not necessarily economically efficient to produce; often it is not. If solar and wind were cheaper than alternative sources of energy, then they would not need subsidies and mandates to “succeed.” And if companies can save money through greater energy efficiency, they’ll be more than happy to spend their own money figuring out how.

But the Post’s main argument is that subsidizing NREL creates jobs. What’s the economic fallacy? It’s what Bastiat and Hazlitt refer to as the problem of the unseen. What is seen are the jobs associated with NREL spending. What is unseen are all the jobs lost by forcibly transferring that wealth. When people pay higher taxes, and when the federal government sucks money out of market investments through deficit spending, that money is no longer available to fund what consumers want and investors see as the more productive opportunities. The result is that jobs shift from more-productive to less-productive ends, destroying wealth.

The wrinkle is that cutting federal spending only for Colorado would screw Colorado taxpayers more by forcibly transferring their wealth to less-productive jobs in other states. The solution to that is to cut spending in every state — or to simply stop forcing Colorado taxpayers to finance corporate welfare in other states. As I noted earlier this year, on net Colorado gets screwed in the wealth redistribution game, which costs the state net jobs.

There are obviously some people on the Denver Post’s editorial board who are not utterly ignorant of basic economics. Why not let them formulate the articles pertaining to economics?