Market Forces

E-mail to Congress:

Let us say I have developed a new widget, which I believe can compete in the marketplace. It works better than any existing widgets now on the market and my manufacturing and promotion costs are such that I can price it competitively. If I take the gamble to pursue the market, the chances are good that I can obtain a large segment of it and make a profit. I need not remind you that this is capitalism, wherein I have an opportunity for personal profit and the public ends up with a better widget for the same price.

Let us now change the scenario a bit. Same as before, except that my costs are higher. If I proceed with the program, I will have to charge a higher price than my competitors to stay in business. If I price at the same level as my competitors, I will lose money and be out of business. What to do? There are some nice answers available. I can get government to put a tax on the competitive widgets but not on mine. I can also get government to give me a subsidy for my widget production. A double deal! Nice! Notice the similarity to government subsidies on wind turbines and photovoltaics. Congress has yet to act on taxing the competitive widgets. It may do this through the CO2 Cap and Trade.

Let us now change the scenario a bit farther. After I am in production with my new widget, including my government subsidy and a tax on the competitive widgets, the general market opinion is that my widget doesn't work any better than the competitive widgets. Initially, there was controversy, but that controversy had been temporarily silenced to the extent that government went ahead with my subsidy and taxed my competitors. Now, it seems quite clear that my widget is really non-competitive. Do I care? No! My government subsidy is still in effect, as is the tax on my competitors. I'm still making money, although it is now based on an unjustifiable assumption. Who suffers? The general public. They are paying for my subsidy and also paying higher prices for the taxed competitive widgets.

You can figure out what the various widgets are from the following participants: Coal-burning electric power plants, wind turbines, photovoltaic cells, carbon dioxide sequestration, Cap & Trade, gasoline vehicles, electric vehicles, air conditioning & refrigeration equipment, roof shingles, Portland cement, forest products, etc. Almost every widget of our society is either directly or indirectly affected by the premise that increasing concentrations of carbon dioxide in the atmosphere lead to global warming, which is deleterious.