I appreciated a short paper, “Energy Subsidies: How Comparisons Should Be Calculated but Aren’t,” by Roy Cordato of the John Locke Foundation, for two reasons:
- He divides. Analyses of taxpayer contributions to various power industries may only discuss dollars contributed with no regard to outputs. He likens the math to trying to run New York State on Rhode Island’s budget. Check out the graph of federal subsidies vs. megawatt-hour.
- He subtracts. Arguments slamming government subsidies to traditional fuels pay no attention to costs of compliance with government regulation on the various industries. Regulations impose penalties or, as Cordato says, “negative subsidies.”
In the end, I like having the freedom to determine whether my biological thermostat may be comforted with some burning coal or wood, to enduring a bout of hypothermia waiting for some passive insolation. More importantly, bad ideas should be allowed to collapse under their own weight, without people lying to satisfy fictitious demand for a world where systems are 100% white or 100% black. According to Cordato:
From the perspective of economics, and liberty, the important question is – how are coercive policies distorting supply and demand relative to a free market that reflects actual scarcities, production costs, and consumer preferences?
