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January 30, 2007

In ill wind

By Daryl Montgomery and Jack Kemp
Subsidies and guarantees are among the favorite tools of governments seeking to manipulate the private sector and untrusting of the market. So what would happen if the US had a European style alternative wind energy project, complete with government subsidies in order to help the industry start up fast? In fact, why not have the government both guarantee the price of electricity produced - and buy all the surplus energy?

That is what Denmark has actually done. The result is a 21.6 billion Danish Kroner loss between 2001 and 2005. That is is equivalent to a $3.7573 billion US Dollar loss over that period. That works out to $692 for every Dane, including the children.

A comparably "effective" program in the United States would cost us around 200 billion dollars, adjusted for our population.

(Jack Kemp is not the former politician of the same name.)

Subsidies and guarantees are among the favorite tools of governments seeking to manipulate the private sector and untrusting of the market. So what would happen if the US had a European style alternative wind energy project, complete with government subsidies in order to help the industry start up fast? In fact, why not have the government both guarantee the price of electricity produced - and buy all the surplus energy?

That is what Denmark has actually done. The result is a 21.6 billion Danish Kroner loss between 2001 and 2005. That is is equivalent to a $3.7573 billion US Dollar loss over that period. That works out to $692 for every Dane, including the children.

A comparably "effective" program in the United States would cost us around 200 billion dollars, adjusted for our population.

(Jack Kemp is not the former politician of the same name.)