When Government Gets Involved

When I was about 10 years old, I spent a couple of weeks at my grandparents farm. One day we were passing an overgrown field, and one of my uncles said “The government pays us to not plant anything there.” They kind of laughed and shook their heads, like “Can you believe that?” I couldn’t, actually.  It made no sense. They explained that the government would pay them not to grow anything, so that crop prices stayed up. It still made no sense. On a fundamental level, even a 10 year old kid understood that.

When it comes to the economy, Obama is a bit of a fool. He is a neophyte. He doesn’t quite get it. He thinks government can conjure up whole industries by showering money on the “good” industries. Over and over, he has said we need to be like Spain, and Germany, etc:

And think of what’s happening in countries like Spain, Germany and Japan, where they’re making real investments in renewable energy. They’re surging ahead of us, poised to take the lead in this new industry.

This isn’t because they’re smarter than us, or work harder than us, or are more innovative than we are. It’s because their governments have harnessed their people’s hard work and ingenuity with bold investments — investments that are paying off in good, high-wage jobs — jobs they won’t lose to other countries.

And yet, it looks like Spain has decided to give up on its massive solar outlays. They created jobs, yes. But it cost them $774,000 per job. They lost 2.2 jobs for every solar job they created. It was a massive boondoggle.

Obama has no idea what he is talking about. He is the most ill informed president we have ever had. The NYT says:

Half the solar power installed globally in 2008 was installed in Spain.

Farmers sold land for solar plants. Boutiques opened. And people from all over the world, seeing business opportunities, moved to the city, which had suffered from 20 percent unemployment and a population exodus.

But as low-quality, poorly designed solar plants sprang up on Spain’s plateaus, Spanish officials came to realize that they would have to subsidize many of them indefinitely, and that the industry they had created might never produce efficient green energy on its own.

In September the government abruptly changed course, cutting payments and capping solar construction. Puertollano’s brief boom turned bust. Factories and stores shut, thousands of workers lost jobs, foreign companies and banks abandoned contracts that had already been negotiated.

The Times article goes on to pretend that the failures were all because people built “inefficient” plants; but that was because the government was paying them to build inefficient plants. They pretend that it is all a matter of setting subsidies at the right level; but that is just using hope as a strategy. They don’t seem to understand that money making businesses need no government encouragement if they are truly money making. And if they are not, why are you shoveling money at them to pretend they are?

Over in Germany, this is happening:

In Spain, the tariff, now adjusted quarterly, is about 39 cents per kilowatt-hour for electricity from freestanding solar power plants, and slightly higher for panels on rooftops.

Germany’s tariff, 53 cents per kilowatt-hour, is expected to fall at least 15 percent this summer, and there are proposals before Parliament to eliminate subsidies for solar plants on farmland.

Bishop Hill reports:

A German aristocrat of my acquaintance has figured out that the price he will be paid for the output of a solar panel is so high compared with the price he will pay for his input of normal electricity, that he is thinking of rigging up powerful arc lamps to shine on solar panels on his extensive roof.

And, apparently others have learned how to game the system:

After Germany guaranteed solar producers a rate seven times as high as the market rate, the country’s electric bill jumped by 38 percent in one year.

Wait a minute. Wellpoint in California increased their health insurance rates by 39% in one year, and Obama said that was reason to take over the whole health care system. Does this mean Obama will take over Germany’s power generation system and keep them from charging these exorbitant rates? Once he takes over, the first thing he will be forced to do is eliminate those subsidies for solar power.

Most European countries have seen the damage that green energy can do to their economies and are rapidly (if quietly) scaling back their support. This is especially true in the countries that have been leaders on solar and wind power. Both Germany and Spain have dramatically slashed their subsidies for renewables, and Spain has reduced its commitment to green power from 2400 megawatts in 2008 to 500 megawatts or less in 2009.

There is yet another lesson from Spain that Obama prefers not to discuss. The $100-million Nellis project created 200 jobs at a cost of $500,000 per job. The longer Spanish experience, according to a recent study from Juan Carlos University, shows a cost of $774,000 for each government-subsidized green job created since 2000. More disturbingly, for each of these jobs, 2.2 jobs in other industries were destroyed because of higher energy prices, not counting manufacturers who vote with their feet. This is surely a success story that Americans can do without.

 

 

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