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The way the government should be investing in alternative energy

Beyond subsidies and guaranteed market share

So far, government attempts at making alternative enery happen have been uniformly disasterous. They either give direct subsidies or create mandated government markets (such as Governor Rhino of Minnesota passing a law that dictates the amount of green energy that the state utilities will provide). Neither of these approaches result in actual “alternatives” but rather higher costs for everyone. What’s worse, they take money from the entire population to enrich those who are in that particular industry; we share the risks and costs but not the rewards.

The simple fact is that if these technologies have any technical merit and can become cost competitive, they’ll be huge commercial successes, and they won’t need the subsidies or guaranteed market shares.

Of course, the liberal response to this is that we need to “prime the pump”. Again, I think this is a stupid argument; no one needed to prime the pump to make the automobile a success, or the personal computer, or the internet (aside from a small DARPA grant that, yes, Al Gore had a part in awarding). But, ok, maybe some times we need to help incubate an embryonic industry.

So how about this for an approach: eliminate the capital gains tax for investments in companies that are doing the basic R and D on alternative fuels. If the companies fail, they fail on thier own, the government’s not out a penny, and the only people who get hurt are the ones who voluntarily took the risk. If they fly, the government’s STILL not out a penny, the people who took the risk reap a larger reward, and the entire economy benefits

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