by
William L. Anderson

Recently
by William L. Anderson: Higher
Education and the Stratified Society

Years ago,
Murray N. Rothbard wrote that modern egalitarianism constituted
a “revolt against
nature,” and Rothbard provided the intellectual ammunition
to prove his point well. The modern Progressive “revolt against
nature” is not limited to just egalitarianism, however, as
Progressives long have tried to convince everyone that if they could
just direct enough government resources at something, they could
undo the very laws of economics.

During the
Great Depression, President Franklin D. Roosevelt even claimed in
his 1932 nomination speech at the Democratic National Convention
that economics
laws were arbitrary things. Declared FDR:

But while
they prate of economic laws, men and women are starving. We must
lay hold of the fact that economic laws are not made by nature.
They are made by human beings.

Indeed, Roosevelt
spent almost an entire presidency railing against economic laws
that were not “created” by anyone, but rather discovered
by people who understood the realities of nature and natural law.
The same president who claimed to care about the “starving”
also had farmers destroy tons of food (the destruction financed
by a tax on agricultural products) in the name of making food more
expensive.

One would think
that at some point, the educated and elite people among us would
have learned from the lessons of the Great Depression that government
intervention makes things worse, but a week of reading the editorial
page of the New York Times, the very pinnacle of status in
American journalism, will cure one of the belief that “educated
elites” learn anything at all. Thus it was that I stumbled
onto an editorial in the NYT that truly defies all natural
laws and actually is akin to an editor railing against the Law of
Gravity.

In calling
for more subsidies for “clean energy,” the editorial
declares:

The federal
government has given generously to the clean energy industry over
the last few years, funneling billions of dollars in grants, loans
and tax breaks to renewable power sources like wind and solar,
biofuels and electric vehicles. “Clean tech” has been
good in return.

During
the recession, it was one of the few sectors to add jobs.
Costs of wind turbines and solar cells have fallen over the last
five years, electricity from renewables has more than doubled,
construction is under way on the country’s first new nuclear power
plant in decades. And the United States remains an important player
in the global clean energy market. (Emphasis mine)

It is quite
clear from this editorial that whatever legacy Henry Hazlitt might
have had at the “Newspaper of Record” while he was an
editorial writer has long disappeared. Hazlitt never would have
considered writing anything that smacked of the “Broken Window
Fallacy,” but today, the NYT shatters glass every day.

A few items
are in order here. First, and most important, any business enterprise
needing tax subsidies to survive is not creating wealth; it is
destroying it. Furthermore, one can note that no matter how
many subsidized jobs were “created” by this industry,
many more jobs were lost elsewhere because the subsidies.

Frederic Bastiat
wrote of what is “seen” and “what is not seen,”
and it is clear that the editors of the NYT are unable even
to imagine what is not seen; they see only the people working
for politically-favored companies. As for people who have lost their
jobs because the government is forcing resources to be directed
away from where consumers want them to go, the editors simply look
the other way or simply are ignorant.

The editors
of the “Newspaper of Record” not only are economically
ignorant, but also are utterly hysterical over the fact that taxpayers
may not have to contribute as much in the future to these “clean
energy” firms. The editorial fumes:

… this productive
relationship (between subsidies and “clean energy” firms)
is in peril, mainly because federal funding is about to drop off
a cliff and the Republican wrecking crew in the House remains
generally hostile to programs that threaten the hegemony of the
oil and gas interests. The clean energy incentives provided by
President Obama’s 2009 stimulus bill are coming to an end, while
other longer-standing subsidies are expiring.

While I hardly
wish to shill for oil and gas companies, nonetheless the reason
that they have this alleged “hegemony” is because factors
of production used for those products generally are moved from lower-valued
to higher-valued uses, which is the opposite of what happens with
factors used to produce alleged “clean energy.” Furthermore,
consumers prefer using the forms of energy which, while meeting
the disapproval from the NYT editors, effectively keep them
warm in winter and cool in summer.

The editorial
continues:

If nothing
changes, clean energy funding will drop from a peak of $44.3 billion
in 2009 to $16 billion this year and $11 billion in 2014 – a 75
percent decline.

This alarming
news is contained in a new report from experts at the Brookings
Institution, the World Resources Institute and the Breakthrough
Institute. It is a timely effort to attach real numbers to an
increasingly politicized debate over energy subsidies. While Mr.
Obama is busily defending subsidies, the Republicans have used
the costly market failure of one solar panel company, Solyndra,
to indict the entire federal effort to encourage nascent technologies.

The Republican
assault obscures real successes that simply would not have been
possible without government help. Wind power is a case in point.
By spurring innovation and growth, a federal production tax credit
for wind amounting to 2.2 cents per kilowatt-hour has brought
the cost of electricity from wind power to a point where it is
broadly competitive with natural gas, sustaining 75,000 jobs in
manufacturing, installation and maintenance.

Other than
the fact that the Solyndra debacle involved outright financial fraud,
and that the company gave a lot of money to the Obama campaign –
and the president singled out the firm for special praise (before
it went belly-up) – one would suppose that we should not pay attention
to Solyndra’s financial collapse.

To call the
decline of wealth-destroying and job-destroying subsidies “alarming
news” is something that only Progressives would say. Furthermore,
there are numerous problems with wind power, including the simple
fact that wind is intermittent, but demand for electricity is not,
which means that power plants must be kept online and running. Even
Denmark, which has built thousands of windmills, has not shut down
one power plant despite the supposed potential of wind power.

Furthermore,
many of the “gains” from wind power have come because
state governments have mandated that power producers generate certain
percentages of electricity from “green” sources. Thus,
like ethanol, which the government forces consumers to purchase,
consumers will have no choice in the matter and ultimately will
finance this coercion via their electric bills.

Not surprisingly,
the advocates of “broken window economics” lament the
fact that if the subsidies are eliminated, some jobs in these subsidized
industries also will be lost. While that is true, the reality is
that the sooner these examples of malinvestment are no longer subsidized,
the sooner resources can be devoted to those goods that consumers
actually want.

This fact drives
Progressives (such as NYT editorial writers) to angst,
as the last thing that should drive an economy is consumer
needs and preferences; instead, people should buy what Progressives
say that people should purchase. Ordinary consumers, after
all, don’t know what is good for them, and that includes fuel purchases,
which means that government (controlled by Progressives, of course)
should either narrow consumer choices or mandate directly what others
should purchase.

Of course,
Progressives claim to love those who are poor or who are not “privileged,”
and while Progressives often rail against people they deem to be
“privileged” (and generally ignoring themselves, especially
since most modern Progressives come from elite backgrounds), their
policies both support the privileged elite and put lower-income
people out of work. For example, the NYT recently gushed
over a new executive order from President Obama that essentially
makes it impossible for any energy company to construct a new coal-fired
power plant.

Over time,
this policy will raise electricity prices, which not only will destroy
wealth, but also will destroy whole lines of employment, and most
people employed in the profitable energy business are not educated
elites. Such people are invisible to most Progressives, who tend
to be wealthy, politically-connected, and utterly contemptuous of
the very people they claim to be helping. (Not surprisingly, those
same Progressives that decry the use of oil and coal are the first
to demand price controls when oil and coal prices rise, claiming
that the energy companies are “manipulating” the markets.)

There
is one more little item to cover. While demanding that taxpayers
continue to fund wasteful energy turkeys (with no offense intended
for those birds that enhance our Thanksgiving meals), which means
that huge amounts of resources literally are thrown into an economic
black hole, the NYT also decries the fact that we have not
had a real economic recovery. A recovery will happen, according
to the NYT and its resident economist Paul Krugman, only
when government increases subsidies, expands the bureaucracies (called
“job creation”), expands its web of business and financial
regulation, and wastes resources on “green” boondoggles.

It is not as
though these folks ever will “get it.” No, what they want
is for the government to step in and force people to make purchases
they never would make in a free market. At the same time, they demand
that governments at all levels block expansion in the very industries
that we need for a real recovery to occur.

The irony here
is that while the NYT
and Krugman go on and on about a recent $2 billion loss by J.P.
Morgan, they lavish praise upon an industry sector whose losses
dwarf anything seen by the banks and demand that taxpayer bailouts
of these permanently-sick industries be increased. Such is the arrogance
these days of American Progressives.

May
22, 2012

William
L. Anderson, Ph.D. [send him
mail], teaches economics at Frostburg State University in Maryland,
and is an adjunct scholar of the Ludwig
von Mises Institute. He
also is a consultant with American Economic Services. Visit
his blog.

Copyright
© 2012 by LewRockwell.com. Permission to reprint in whole or in
part is gladly granted, provided full credit is given.

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