It is difficult not to gloat at the fate of green investing or crack a silent grin at the unintended consequences the "green economy," has begun to inflict- that is until one realizes the harm such nonsense is doing to the rest of us. In my case, this is partly because I resent the thick air of smugness, the snide sneer belaying the unspoken boast of moral superiority among those who, for example, drive about the sprawling highways of California in hybrid cars, pledge to burn only ethanol, and buy "carbon offsets" to undo the damage to the earth inflicted by the 22,000 kilowatt hours sucked down by their 10,000 square foot homes every month. In short, I take pleasure in the misfortunes of green snobs.
The primary reason is because the green snobs are engaged in a dirty business. Wittingly or unwittingly they use very old and very dangerous rhetoric to sabotage free markets. This is not a new approach, it is so old, in fact, that it has become a very reliable gauge to attribute rank and naked populism for the sake of accumulating power to any public figure who purports to have an altruistic solution to some social problem. Consider this passage:
One of the great mistakes is to judge policies and programs by their intentions rather than their results. We all know a famous road that is paved with good intentions. The people who go around talking about their soft heart -- I share their -- I admire them for the softness of their heart, but unfortunately, it very often extends to their head as well, because the fact is that the programs that are labeled as being for the poor, for the needy, almost always have effects exactly the opposite of those which their well-intentioned sponsors intend them to have.
This, of course, was Milton Friedman back in 1975. I think Professor Friedman was a little generous, but this may be a sign of the times for, you see, today even the most docile investigation into our self-righteous, green do-gooder will reveal that they are using their hybrid car (which actually has a larger lifetime energy impact per mile than does your politically incorrect gas guzzler) to speed their illegal narcotics developed by the very pharmaceutical companies they have been demonizing in the press for years across the California highway system at 100 miles per hour, so they can arrive in time to celebrate the riches they reaped by investing their "carbon offset" payments in the private equity vehicle they co-founded.
It doesn't bother me one bit that the self-appointed leader of such movements shells out $30,000 in electricity and natural gas bills a year even after the contribution of solar panels and the like. This is as it should be. Electricity is provided at a price and paid for. What bothers me is two-fold:
First, that a semi-market system is good enough for the green snobs to use in vast quantities for their purposes, but not for the rest of the planet. Any hint that their overt consumption is out of the ordinary is excused away with some argument akin to: "How is it fair to compare an active politician's power use to the average family?" The implication is that the business of the green leaders is more important than that of the rest of the planet. They are excepted from compliance. But, as an affirmative defense, they also "offset" their egregious use of resources with "carbon offsets." Never mind that these are thinly veiled private equity investments inaccessible to any but the rich by virtue of SEC net-worth edicts. Really, I am less offended by the investment structure than I am in the absolutely non-existent attempt to even mask the naked fraud being perpetrated here. There isn't even the slightest effort to make a legitimate argument that investing in a private equity vehicle is even remotely connected to "carbon offsets." It is as if they never thought anyone would dare to look.
Second, that these same populists have created an inefficient power market in the first place by effectively fixing prices for consumers. This has, of course, ostensibly been to insulate the poor and needy from expensive power or (god forbid) fluctuations in its price, and to prevent the greedy power companies from taking advantage of consumers. Why, in this day and age, a spot price for kilowatt hours is not displayed in every home on a digital readout, permitting users to allocate their power usage according to cost, and that power to be priced according to demand, is beyond me. But then, I look to the green snobs and realize, suddenly, who they are. They are the politburo members, sped quickly down the reserved center lane, past the teeming crowds who must wait in traffic. Spared the ravages of the system they created for "the rest," so that they can conduct the important business of the state in comfort and style- unmolested by scrutiny. Insulated by their smug superiority and their certainty that their bold plans will prevail over such trivial things as supply and demand. So certain of their entitlement that they need not even pretend to justify their immunity to the rules for "the rest."
In this context, the Going Private reader will understand my skepticism then at the many incentive programs for ethanol that have cropped up (if you will excuse the pun) in the last several years. That same skepticism is the source of the sad, thin smile on my face today after reading the Financial Times. To wit:
Governments need to scrap subsidies for biofuels, as the current rush to support alternative energy sources will lead to surging food prices and the potential destruction of natural habitats, the Organisation for Economic Co-operation and Development will warn on Tuesday.
The OECD will say in a report to be discussed by ministers on Tuesday that politicians are rigging the market in favour of an untried technology that will have only limited impact on climate change.
“The current push to expand the use of biofuels is creating unsustainable tensions that will disrupt markets without generating significant environmental benefits,” say the authors of the study, a copy of which has been obtained by the Financial Times.
The survey says biofuels would cut energy-related emissions by 3 per cent at most. This benefit would come at a huge cost, which would swiftly make them unpopular among taxpayers.
The study estimates the US alone spends $7bn (€5bn) a year helping make ethanol, with each tonne of carbon dioxide avoided costing more than $500. In the EU, it can be almost 10 times that.
It says biofuels could lead to some damage to the environment. “As long as environmental values are not adequately priced in the market, there will be powerful incentives to replace natural eco-systems such as forests, wetlands and pasture with dedicated bio-energy crops,” it says.