Government's Good Intentions Can Have Negative Consequences
October 7, 2011
The federal government consumes about a quarter of the United States' gross domestic product and owns more real estate, uses more energy and has more cars than any other entity. The government's size allows it to invest in projects on a scale that private entities cannot. That means decisions the federal government undertakes have enormous impacts -- which means enormous damage when the government makes spending choices that are bad for the environment. While government projects that marginally benefit environmental protection efforts are touted as victories for the green movement, substantial government spending on wasteful and environmentally destructive policies undoes much of this progress, say Eli Lehrer, vice president of the Heartland Institute, and Ben Schreiber, a climate and energy tax analyst at Friends of the Earth.
- The $50 billion-plus five-year tab for ethanol subsidies has brought millions of acres of previously wild land under cultivation, increased the use of chemical fertilizers and wasted billions of gallons of water.
- More than $8 billion in Department of Energy loan guarantees for coal provide enormous taxpayer support for the dirtiest of all widely used fuels.
- Oil interests, subsidized mainly via huge tax benefits like an "intangible drilling cost" tax advantage, reduce Treasury revenue by almost $20 billion a decade.
While these are some of the larger, government-funded projects that are accelerating the destruction of the environment, there are still dozens of others: tax credits for consumers to buy inefficient vehicles, wasted fuel for unnecessary plane flights, direct crop subsidies that encourage deforestation, etc. And with $380 billion in spending of this kind scheduled for the next five years, changing this trend does not appear to be a goal for the near future.
Without doubt, at least a few of these policies were intended to be eco-friendly. However, planning macroeconomic policy often limits the ability to foresee all the potential side effects, such as adverse consumer reactions or exploitative business decisions. For this reason, government ought to take a step back from its environmentally-motivated market intervention and stick to policies that are broader and less pervasive: funding for basic public research, maintenance of refuges and parks, etc.
Source: Eli Lehrer and Ben Schreiber, "Go Green...," Weekly Standard, September 12, 2011.
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