RALEIGH – Vice President Joe Biden showed up in Durham last week. Although I couldn’t blame anyone for wanting to escape what was at the time the scene of the unconstitutional crime of ObamaCare, I don’t think Biden had fled Washington for North Carolina out of shame. Instead, he was here to promote another of the administration’s bad ideas: government bailouts of private business.
The vice president used a more colorful term, of course: green jobs.
LED-maker Cree has created hundreds of green jobs, Biden says, because of the demand for energy-efficient lighting. But what Cree really represents is how government meddling in markets creates politically connected winners and political unpopular losers. As the Raleigh News & Observer aptly put it, Cree “has become a symbol of the Obama administration’s economic hopes.” Private firms shouldn’t be part of any political program.
What’s the connection between Cree and the federal government? Well, for starters the company has pocketed $39 million in federal tax credits so far, thanks to a new program promoting energy sources the government prefers. Furthermore, the Obama administration favors an even-broader array of tax and regulatory policies designed to raise the cost of energy and thus change the energy consumption of American households and businesses.
If you are in the business of selling LEDs, solar panels, wind turbines, or fantasies, the Obama agenda will be good for you. If you are in the business of selling energy derived from fossil fuels, traditional lighting fixtures, and all other goods and services that will take a hit as consumers are compelled to spend more money on “green” energy, then the Obama agenda will be very bad for you.
What Biden’s visit to Cree was meant to convey, in part, was this: if businesses play ball with us and conform to our political preferences, they’ll make money. If they don’t, tough.
If you think I’m overselling the dangers of government manipulation, take a look at what happened to one of the linchpins of North Carolina economic growth during the 1990s: the swine industry. As N.C. State economist Mike Walden explained in his 2008 book North Carolina in the Connected Age, our state’s traditional economic triad of tobacco, furniture, and textiles/apparel gave way some years ago to a broader array of five industry clusters playing an increasingly significant role in North Carolina growth: finance, chemical/pharmaceutical, technology, vehicle parts, and food processing.
Swine farms and production facilities have been the largest component of that last category, employing thousands of people and generating millions of dollars in private income and tax revenue. But in the past few years, the industry has fallen on hard times. Some of its difficulties stem from increased competition from abroad, shifts in consuming patterns, and other factors that are outside – or at least should be outside – of the control of government. But state and federal politicians have also placed severe burdens on the swine industry, often without thinking through their implications.
At the state level, lawmakers and regulators responded to some flood-related damage to swine-waste lagoons by trying to force the industry to adopt costlier alternatives for handling its waste. While it is legitimate for the state to protect North Carolinians from threats to clean water, swine waste was never as great a threat as policymakers thought. The industry was a convenient target, however, partly because of issues of odor.
More recently, the industry took a bigger hit from Washington in the form of higher prices for the main feed grain for swine, corn. By offering massive subsidies for the production of ethanol as a fuel alternative, the federal government has created problems for a host of corn-dependent industries, including swine production. Unfortunately, the public will never see much in the way of corresponding benefits from ethanol, which remains an undesirable fuel and an unsustainable, politically driven business.
There is no doubt that some private companies will make money and create jobs if the Obama administration continues its push for costly, inconvenient “green energy.” But more companies will lose money, and their employees lose jobs, because of it. Don’t expect the vice president to visit their premises any time soon.
Hood is president of the John Locke Foundation