Monday, May 23, 2011

On Energy Subsidies

Barack Obama is presently waging faux populism on "Big Oil."

Let it be noted that SWNID favors ending special tax breaks and subsidies for Big and Little Oil.

But sauce for the goose is sauce for the gander. SWNID also insists on an end to subsidies and tax breaks for Big Ethanol, Big Wind, Big Solar, Big Biomass, Big Coal, Big Gas, Big Hydro, and Big Nuclear.

Mr. President, set a five-year schedule for winding down all energy subsidies and most agricultural subsidies (which happen to push up food prices while stifling development in the parts of the world that need developing). Then let freedom ring Adam Smith's bell until we have a more rational distribution of economic resources that serves the common need for energy.

This isn't about who is getting rich and who isn't. We don't care if the rich get rich, as long as everyone can be better off. Exxon's profits don't make SWNID poorer, and confiscating them for some federal boondoggle won't improve the SWNIDish quality of life one bit.

This isn't about what's fair and what isn't, though that's closer. Fairness in the tax code is a tough concept to define, let alone attain, though there's no obvious answer as to why one business should have tax advantages over another. We refuse to engage in the game that argues whether this or that group deserves a special break for some high-minded reason that's usually thinly disguised self-interest.

This is about marcoeconomics, about efficiency as markets, over time, judge that better than does politics. Because in the end, it's always politics that decides who gets a break on their taxes. Always.

Which is why the populism is faux.

Circle closed.


Alex L said...

You mentioned agriculture subsidies - so did
someone else today ...

JB in CA said...

I don't understand how ending oil subsidies amounts to "confiscating" Exxon's profits "for some federal boondoggle". But I think I do understand how ending oil subsidies would cut federal spending by four billion dollars per year, while raising the price of gas by only a fraction of a penny per gallon (link).

Anonymous said...

You forgot subsidies for Big Education.

I'm just wondering what marcoeconomics is? Is that from famed PGA golfer Chris DiMarco?


Jon A. Alfred E. Michael J. Wile E. SWNID said...

Props to Pawlenty for owning the macro against the politico. We like!

JB, we differentiate ending subsidies from imposing so-called windfall taxes on oil companies. Exac-itackly.

Anon, we take your joke but actually insist that higher education subsidies have doubtless had the effect of making higher ed more expensive, at least ostensibly. Note well that inflation is highest in those segments of the economy (health care, education) most subsidized. Let's phase out Stafford loans over a five-year period, along with the other subsidies. This is one academic administrator who is tired of dealing with students who are staying in school to stay on the federal dime.