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400 Capitol Street, NW
Washington, DC 20001
Every day in Washington D.C. is filled to the brim with sound bites delivered by our incompetent leaders, devoid of any facts or reason, but fit for media consumption. The Obama administration is no exception to this unfortunate, but ironclad, rule of politics. Take the predictable spiel about “green jobs,” for instance we always hear rosy scenarios of a growing green industry, flush with high-paying jobs. A solar company touted by Obama as “a testament to American ingenuity and dynamism” merely a month ago has just shut its doors. Solyndra, the recipient of $535 million in low cost loan guarantees from the inefficient Department of Energy, closed shop without warning two weeks ago, ordering confused workers to vacate the premises. The unholy connections between Solyndra and the current administration, though, run deeper than a loan gone sour. Indeed, it is curious that George Kaiser, a large contributor to the failing company, was also a high-profile bankroller for Obama’s 2008 campaign.
Dubious handouts from the government to favored businesses are nothing new, however. As many political observers of the 1980s could tell you, the subsidization of synthetic fuels was similarly a disaster. Originally an attempt by the Carter administration to promote “energy independence,” the Synfuels Corporation received a hefty $15 billion appropriation. Although it began with the noblest of intentions, it wandered from its original purpose and became mired in cronyism and corruption. High-profile resignations and repeated claims of mismanagement led Democrat Howard Wolpe to remark that, “We have created a fiscal Frankenstein that is beyond the control of the Executive and Legislative branches." Although many lawmakers may use the “job creation” line as a last ditch defense of their failed pet initiative, they fail to mention jobs that are indirectly lost. A recent study from King Juan Carlos University in Madrid finds that every “green job” will result in the loss of 2.2 other jobs on average. Why is that? As the author of the report, Gabriel Calzada, explains, “The loss of jobs could be greater if you account for the amount of lost industry that moves out of the country due to higher energy prices.”
The question that naturally arises is why failure inevitably plagues government initiatives and “investments”? As we have seen in both the Solyndra and Synfuels saga, the government is more interested in promoting political ends rather than economic expansion. Whether a subsidy’s aim is to pay back a loyal supporter, or to attract more supports in the name of a vague ideal, power-plays and political considerations are the sole focus of activity. If the government were to simply yield to the private sector in matters of energy policy, America would be able to achieve “energy independence” quickly and more efficiently than it would under a stifling bureaucracy. In the case of Synfuels, even the Energy Secretary of the time admitted that "drilling in America would produce much more oil" than handing the corporation a blank check. Even today, political leaders fail to acknowledge the benefits in unleashing a dynamic free-market in the energy sector. Despite the millions of barrels of oil that could be obtained through off-shore drilling and the abundant supplies of natural gas, the government imposes a daunting regulatory approach to producing energy. Also, the government inefficiently subsidizes deep-shore drilling, which collects less oil on average and leads to the dangerous conditions present in the BP Oil Spill. These missteps, though, are merely a few of the plethora of unintended consequences that haunt every government action.
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