It is about government subsidizing an industry that might offer potential as a self-sustaining industry. There are those that question any government subsidies for private for-profit companies, and rightfully so. But the need for alternative energy sources has caused the government to throw money against the wall to see what sticks. It isn't sticking for wind.
"The federal tax credit has helped to buoy American wind energy since 1992 and, more recently, to spawn a small but growing manufacturing sector." But it has spawned a sector that can't exist without continuing the federal tax credit. It has been 20 years - when is enough enough?
And it isn't just the federal tax credit - town, cities and states have fallen all over themselves to compete by offering local tax and other incentives if the company will just locate there. Jobs, jobs is the rallying call, but it comes at a price shouldered by tax payers at all levels of government and across the country.
The federal tax credit (PTC) is about to expire again. And the rally call can be heard. And there are those that point to a growing industry as the rationale to renew the tax credits while ignoring that it is a growing industry solely because of tax credits and incentives.
The Monitor notes that "[m]any projects simply won’t meet the fundamental hurdle of profitability without the PTC, especially in a market where natural gas fired electricity is so cheap." In the second Monitor article much good advice is given on building to sustainability, but still the questions remains whether taxpayers ought to be building an industry that may (I say will) never be profitable without taxpayer dollars. And even if it becomes sustainable - will the taxpayers receive any ROI?
Should any industries be created with tax credits and the like yet provide no return on that investment. In the capitalist system isn't capital invested to obtain a return on the investment? Isn't profit, or not, the risk that the capital investor takes? Should it be any different for government (taxpayers) investment? Should taxpayers bear the risk of losses without the profits or other return for their investment of tax dollars?
Arguably the return of the investment of government dollars is the jobs created. But that return still demands that the incentives continue because the return (jobs) remains dependent on the incentives. Interesting too is that the return on investment will not be made up of tax revenue. Granted some of the tax incentives are limited in time, but they have a way of being extended indefinitely when the capitalist whines and moans about moving to a better business environment.
The wind power industry seeks to leave the risks of investment to the taxpayer while it sucks out their return on investment without any risk. It becomes in effect a cost plus contract arrangement whereby the government guarantees the operating costs and level of profit. In certain situations such an arrangement makes sense because the government lacks the expertise. An example might be the post office. But subsidizing an innovative industry like wind power is an artificial means of generating profit where profit could not otherwise be generated.
Wind power investment by the various levels of government in innovative industries like wind is more the situation of state capitalism as referred to in the Business Week article The Rise of Innovative State Capitalism:
"Across much of the developing world, state capitalism—in which the state either owns companies or plays a major role in supporting or directing them—is replacing the free market. By 2015 state-owned wealth funds will control some $12 trillion in assets, far outpacing private investors."The question is really who is it that should be determining innovation - the government (the state) or the market? There might be good argument that not only government investment but actual ownership in certain areas like energy is demanded. Thus there may be certain situations where innovation is not best served by a competitive marketplace, and, as a corollary, the public, e.g., its energy needs, is best served by state capitalism in the Marxist sense, e.g., Amtak.
Our economic system has been well served by a competition construct that fosters innovation. Doesn't the trend to state capitalism eliminates innovation arising from within society to be replaced by ideas and concepts generated by government bureaucrats and politicos?
Isn't innovation best left to competition among those willing to take the risk for success or failure?