“Government’s job is not to pick winners and losers in the economy.” It’s a statement said over and over again by conservative politicians and ideologues. It is a commentary conservatives preserve for rebuking regulatory controls on industry or the shelling out of government subsidies for what they may consider unfavorable investments. Conservatives, after all, believe in an unregulated, unhampered capitalist system…winners and losers should be left up to the free market.
Yet, conservatives don’t always seem to abide by the laws of free market; in fact, they are happy to cast the whole system aside when they feel one industry needs special treatment.
For decades, the U.S. has subsidized fossil fuel and nuclear energy corporations, even continuing the subsidies as these industries have grown and become well established. In 2011, when Exxon Mobil exceeded $41 billion in profits, republican U.S. senators blocked a bill that would have ended oil subsidies.
There is an argument to be made for government subsidies especially when such an investment can result in benefiting society as a whole. Government investment in technology can take society in a new direction that otherwise would not be possible. Government investment is what has made NASA and travel to the moon achievable and research and development of new drugs and medical treatments a reality.
In fact, a study by DBL investors (What Would Jefferson Do? The Historical Role of Federal Subsidies in Shaping America’s Energy Future?) suggests that the first fifteen years of an emerging industry, energy in particular, are the most critical in developing and refining technology. Note the following:
Federal support during the first 15 years works out to $3.3 billion annually for nuclear energy and $1.8 billion annually for oil and gas, but an average of only $400 million a year in inflation-adjusted dollars for renewables. (Long History Of U.S. Energy Subsidies, Chemical & Engineering News)
These numbers represent only the first fifteen years of the life of the industry. A 2011 study by Management Information Services, Inc. (MISI) estimated the federal subsidies for various energy sources accumulated over the years 1950–2010. The study found that oil, natural gas, and coal received $369 billion, $121 billion, and $104 billion (2010 dollars), respectively; renewable energy such as wind and solar received $73 billion and nuclear energy received $73 billion. These are direct subsidies and tax incentives. These subsidies do not include the costs of energy development (primarily fossil fuels) in terms of environmental degradation and regulation, infrastructure, health care, etc.
Republicans have continued to denounce subsidies and government investment in green energy technologies despite their continued support for well established fossil-based energies. Here in Pennsylvania, republican Governor Tom Corbett and the republican controlled legislature continue to subsidize the oil and gas industries at a cost of almost $2.9 billion a year (Pennsylvania Fossil Fuel Subsidies: An Overview, Pennfuture) while refusing to invest in solar and wind.
Republicans have also been choosing winners in the automotive industry. In Arizona, New Jersey, Ohio, Texas and now Michigan, the republicans (with the support of some democrats, especially in Michigan) have pushed through rules and legislation that would encumber the free market and provide leverage to the traditional manufacturer-dealership framework that has existed for so long.
Why all the sudden the need to bolster car dealerships? Tesla Motors, a silicon-valley startup company that has revolutionized the electric car would prefer to sell their cars directly to consumers. This approach has come under heavy fire by the National Automobile Dealers Association which is threatened by direct sales, thus lobbying hard in several states to mandate how cars are sold. Consumers want to purchase cars directly from Tesla. Tesla wants to sell cars directly to consumers. Republicans have done exactly what they proselytize against…stifle the free market.
There are of course reasons why republicans choose winners. The winners after all have chosen them. The fossil fuel industry continues to delve out tens of millions in campaign contributions annually to republican candidates. The associations representing car dealers have rewarded republicans with contributions for blocking non-traditional sale methods for cars. Sure democrats get some of this money too. But the hypocrisy lies within the republican party which feeds off of the mantra of a free market.
The free market exists…only it is in our state legislatures and in congress…money talks and when lobbyists spend enough money on a politician, he or she will do what is asked of them…even when it goes against their “ideology”.
Politicians and lobbyists are the winners. We are the losers. Any questions?