The New Ethanol

Does this sound familiar? The Congress of the United States decides that what the country needs is more energy from alternative sources and so embarks on a program to encourage via subsidies the development of that energy source.

If you’re thinking “oh yeah, ethanol” well that’s yesterdays news. The new kid on the subsidy block is solar cells. Clusterstock points out that the new stimulus bill creates a 30% investment tax credit for companies engaged in manufacturing advanced energy property. According to their sources, 82% of all solar cells are currently manufactured in Asia which layers subsidies on top of their wage advantage to knock competitors out of the market.

Clusterstock takes issue with the approach noting that, “Starting a manufacturing industry on the back of the stimulus bill seems like a way to create some short term work that will eventually just go out of business.” Actually that might be the best we can hope for. If experience is any guide we’ll create an industry that the taxpayer and consumer subsidize far into the future. Once these things get a toehold they’re harder than vampires to kill.

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