January 2nd, 2021 by Steve Hanley
There is a fundamental difference of opinion between those who think government has a duty to create the rules for an orderly society and those who think government should stay out of the way and let people create their own commercial and personal relationships. Never the twain shall meet, apparently.
The conflict becomes most acute when the response to an overheating planet is the topic of discussion. There is a large (and growing) number of people who think the free market is all humanity needs to craft responses to global warming. If water is scarce, it will become more expensive. That in turn will induce people to make economic choices like whether to stay and pay the higher prices or move to where prices are lower. It’s the magic of Adam Smith’s “unseen hand” at work and it guarantees the most efficient use of capital. It also insures that some people will become very, very wealthy and what’s wrong with that?
The other side of the coin is the laws and policies created by governments can encourage actors in the private sector to take risks they would otherwise avoid. Government loan guarantees unlock access to capital for all sorts of clean tech ventures from solar panel makers to lithium mines. Governments can also underwrite basic scientific research that is too expensive for private enterprise to tackle and help accelerate the commercial acceptance of new technologies.
Focus On Electric Vehicles
Let’s focus on electric vehicles. If people want EVs, let them vote with their wallets. If prices are too high, few will buy them and that’s the way things should be if you are a free market advocate. Forget rebates, tax credits, and the like. If charging infrastructure is required, let private industry build it. Tesla has done so without any government help. Why can’t other companies do the same? There were no government incentives to encourage people to buy conventional cars or build gas stations, why should there be any for electric cars and EV charging networks today?
Logically, the free market advocates are correct. We didn’t need rebates to encourage people to buy cell phones or microwaves or VCRs (remember them?). What’s the big deal about electric vehicles? Why should they get preferential treatment? There are three answers.
One, human activity has contributed to the planet getting hotter, putting the ability of human beings to continue living on our little blue lifeboat at the far edge of the universe at risk. The need to act is immediate and urgent.
Two, the free market system so vigorously defended by its supporters is a lie. Fossil fuel companies pay NOTHING for the harm they do to the environment. It’s as if your neighbor built a campground next door and decided to dump all the effluent on your land for free. If that happened, you would be pretty upset and justifiably so. But because the damage done by extracting and burning fossil fuels is largely invisible, the pollution continues unabated.
Three, the fossil fuel industry gets massive subsidies from national and local governments. If the free market promoters were honest, they would demand an end to such financial and policy supports because they distort the economic parameters. In other words, they are in favor of free markets that favor them but opposed to free markets that favor others. There is a name for such cognitive dissonance — hypocrisy.
If humans have any hope of heading off the worst consequences of global heating, government action will be essential. Much to the consternation of the free market crowd, at the start of 2021 there are 31 national and local governments that have announced bans on the sale of some forms of transportation powered by internal combustion engines. Here’s the complete list as compiled by Charged Future.
If you are in favor of passing on to your heirs a planet where they can continue to thrive, these bans should be welcome news. If you are a free marketeer who believes passionately in the right to acquire wealth regardless of the consequences, it will set your teeth on edge. The one thing we can all be certain of is the free market crowd will never, ever admit there may be some deficiencies in their view point. Heaven forfend that the so-called level playing field they rhapsodize about should actually be level for all people, not just them.
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