Friday, December 12, 2008

Going "Green" Means Going "Red"?

Cato Institute's "techknowledge" newsletter reminds us that the whole "going green" approach by the federal (and state) governments will likely lead to more "going red" in two ways:
  1. Increasingly socialist political manipulation of the economy, and

  2. Increasing government debt (and taxes) as the politicians push agendas that are counter to growth, productivity and private investment.
One of the problems with the government throwing money at "green" initiatives is that some businesses will be incented to participate simply because they will benefit from the federal monies in the program. They will do this for short-term gain, even though the net and long-term effect on the general economy may be negative.

Take for example the foolishness of making our machines competitors for our food supply via the government-back ethanol subsidy programs. The corn supply -- a staple in the food chain -- is being diverted to provide fuel while there is a severe shortage of corn for food products such as livestock feed (leading to increased prices for meats), corn meal, corn syrup, and more.

Despite this craziness, major players like ADM and others are participating in the ethanol market simply because it is presently beneficial for them to do so. The problem is, on the one side, ADM's willingness to sacrifice the larger marketplace "good" for short-term gain. However, if the governments (state and federal) were not throwing non-market-driven money into the arena and distorting the market value, this foolishness would be entirely unsustainable.

Think about it.

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