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Carbon Tax Ignores History

Tax Ignores History

By Isaac MacMillen

Despite consistently
describing the economic situation as being dire
, President Barack Obama is
rapidly moving forward with policies that have the potential to seriously harm
American industry. He has tasked
Vice President Biden to promote the cap-and-trade program
that the
envirolobby has been seeking after for over a decade.

The Vice-President, armed with a new study
purporting to claim that cap-and-trade would promote green jobs—via government t
subsidy—is working to allay fears in industry-heavy states, many of which were
instrumental in Obama’s victory. The study, produced by the liberal
environmentalist group Environmental Defense Fund (EDF), reveals a large number
of companies that could add jobs if cap-and-trade were introduced.

But the question is begged: If green energy is so
wonderful, why isn’t the free market jumping at the opportunity? If the program
needs the government’s hand to jump-start it, it will need government’s dollars
to sustain it. And if those are ever in short supply, it will risk collapse.

A good case study is ethanol. After years of
promoting it as an alternative to fossil fuels, the sad truth has emerged over
time that the industry is almost entirely dependent upon the government. To make
matters worse, ethanol-only gasoline actually ends up being more expensive than
petroleum-based gas.

And without the government subsidies that support
it, it would likely fail. As ALG News has previously reported, there can be
unintended side-effects—in the case of ethanol, government
subsidies have contributed to food shortages
in certain regions around the
world, leading to political and economic destabilization.

But even if the green industry could stand on its
own, it won’t start overnight. The corporations in place that would offer green
jobs are not nearly large enough to absorb the massive numbers of workers that
would be laid off when the new cap-and-trade energy policy takes effect. And
new, “green” energy plants will not be able to be built at the same rate at
which the old ones will fail.

So what will happen? Bail them out? That would
compromise the environmental principles upon which the carbon tax is based.
Perhaps they may share the fate of the Lehman Brothers, who were refused help
while they watched their fellow investment bankers receive government aid.

Energy independence is a positive, strategic goal.
Renewable energy is a smart, practical goal. But if government tries to “help”
the country decide what is best route to that goal, it will only result in
failure. The free market is more than capable of discovering and implementing
efficient energy policy—while rejecting energy ideas that have no sound economic
or scientific basis. For example, nuclear energy—coupled with fuel
reprocessing—is a proven renewable energy resource.

America has many resources, to boot. But, like
ethanol, not all of them can be efficiently converted into energy. If the
government forces an energy revolution for which the market is not ready, it
will end up with multiple failed programs on its hands. And the nation has
enough of those.

The perfect
example is the state of California
. Governor Arnold Schwarzenegger began
implementing a cap-and-trade program in 2006, promising that “green” jobs would
spring up to replace lost ones. But that didn’t happen. California has been
losing jobs for quite some time now to more business-friendly states.
Unemployment has increased from just under 5 percent to over 9 percent. This
will happen on a national level too, if Mr. Obama gets his way.

Unfortunately, it appears that the Obama
Administration is trying to force the issue. Even if Mr. Obama tries a
government-encouraged, market-based approach (as California did), he will wind
up having to bail out the program once it fails. By heavily subsidizing the rise
of “green power,” yet another government bureaucracy will be created. But
perhaps that was its goal all along—greater government control over the economy
and most certainly over energy production.

The price will be heavy. Politically, the
industrial states may not forgive the man they placed in office in 2008.
Economically, millions of Americans will risk losing jobs over a
special-interest program. And the energy promised will come at such a high cost
that Americans may just pine for those days back in the summer of 2008, when gas
was “only” $4 a gallon.

But by then, it will be too late.

President Obama needs to take a step back and
re-evaluate his energy policy—and his ideological environmentalist policies. The
experience with ethanol has clearly shown that government-subsidized energy
initiatives are subject to high cost and likely failure. And with the current
economic climate, cap-and-trade is the last thing that most companies can

And despite the loud claims of the envirolobby,
America cannot afford it either.

Isaac MacMillen is a contributing editor for
ALG News Bureau.