Al Gore’s Ethanol Epiphany
Mr. Gore’s mea culpa underscores the degree to which ethanol has become a purely political machine: It serves no purpose other than re-electing incumbents and transferring wealth to farm states and ethanol producers. Nothing proves this better than the coincident trajectories of ethanol and Mr. Gore’s career.
I’ve hesitated to link this for some time, because Gore is a lightning rod and the point of the article is much more about ethanol and the distortion of energy subsidies and our political process. If there is a criticism about Gore here, it’s no greater criticism than we could and ought to make about nearly any other politician: their principles, even those purportedly nearest to their hearts, are all too easily sacrificed on the altar of re-election (e.g. McCain, John).
The main point i’m trying to reinforce here is what i believe to be the consensus economists’ opinion.
1. AGW is happening, and significantly taxing fossil fuels will create a powerful incentive to move towards cleaner energy.
2. Fossil fuel taxes should be applied to the general treasury and offset with lower taxes across the board, so that we depress fossil fuel consumption without punishing the economy.
3. Alternative energy should NOT be subsidized. The expense of fossil fuels, after taxes, will drive the market (with appropriate regulations, of course) towards the more efficient solutions and away from the less efficient solutions.
Subsidies, as we can see with the ethanol debacle, flow towards the technology in the most powerful politicians’ districts, not the technology with the most promise.
This is what i mean, as a republican, when i speak of ‘less government interference’. I do not mean that government should do nothing. I mean that government should do what plainly lies within its purview and ability, which is to create a smart tax policy. It should then stop trying to pretend that it knows which solution is the best. That’s why we fund research at universities and facilitate entrepreneurship.