“The PTC was created in 1992 to get the wind industry off the ground. Yet 20 years later, we have little to show for it.”
When it comes to rent-seeking by business, Concentrated Benefits + Diffused Costs = Government Growth.
In “Regulatory Failure by the Numbers,” a simple hypothetical was given:
“While the benefits of a regulation may be enjoyed by a relative few, the costs are often spread out among many. If the per person cost of a regulation is only a dollar or two, no one has a financial incentive to travel to Washington to lobby against it.”
Economists in the 19th century understood the problem created by this incentive asymmetry, and Michael Giberson found this in a 1935 book explaining the passage of the Smoot-Hawley Tariff:
“Although . . . theoretically the interests supporting and opposed to [tariff] legislation . . . are approximately equal, the pressures upon Congress are extremely unbalanced. That is to say, the pressures supporting the tariff are made overwhelming by the fact that the opposition is negligible.”
Today, we see examples of business rent-seeking from concentrated benefits-diffused costs all around us. Political capitalism, aka crony capitalism, is the result.
Enter the government-dependent industrial windpower industry, represented by the American Wind Energy Association. The for-profit wind industry–the ‘bootleggers’–is given cover by the “Baptists,” Big Environmentalism.
“Government goes to those who show up.” Big Government Energy–wind power, on-grid solar, ethanol, and battery/EVs–got to Washington first, but there is now opposition from limited-government and taxpayer groups. And in the case of windpower, another important opposing force has mobilized: grassroot environmentalists.
Game on. Yesterday, the following letter from the American Energy Alliance et al was released to Congress on the looming expiration of the renewable Production Tax Credit (PTC). It reads:
Dear United States Senators and Representatives:
The principal federal support for wind energy, the so-called Production Tax Credit (PTC), is scheduled to expire at the end of this year. The undersigned organizations and the millions of Americans we represent stand opposed to extending the wind PTC. This special provision continues the deplorable practice of using the tax code to favor certain groups over others.Whenever the government protects a particular industry, as it has with wind energy production,the industry tends to remain dependent on it. As Nobel laureate economist Milton Friedman noted, “The infant industry argument is a smoke screen. The so-called infants never grow up.”
The wind PTC, like other green energy incentives, is a prime case in point. The PTC was created in 1992 to get the wind industry off the ground. Yet 20 years later, we have little to show for it.
We’re still providing a $5 billion special tax break each year for an industry that supplies just over 2% of our power. If a new technology truly has worthwhile benefits for American consumers such as lower cost, higher efficiency, or environmental benefits, then that technology will demonstrate its value by competing in the open market for consumers’ dollars—not by living off of special provisions in the tax code. American consumers—not Washington lawmakers—should decide the future of American energy.
It is time to end special tax provisions that distort the energy market and increase energy prices.We urge you to let the wasteful wind PTC expire as planned at the end of the year.
The 88 organizational signatories are:
American Energy Alliance; Americans for Prosperity; Alliance for Wise Energy Decisions
Adams County Save Our Skies; Advance Arkansas Institute; Advocates for Prattsburgh; Advocates for Responsible Energy Development (IL); American Tradition Partnership; Auglaize Neighbors United
FreedomWorks; Freedom Action; Heritage Action; National Taxpayers Union
Competitive Enterprise Institute; Commonwealth Foundation; The Club for Growth
R Street; Sixty Plus Association; Americans for Limited Government
Coalition to Reduce Spending; National Center for Public Policy Research; Council for Citizens Against Government Waste
The Black Fork Wind Resistance (OH); Brown County Citizens for Responsible Wind Energy (WI); Calumet County Citizens for Responsible Energy; Calumet County (WI)
Center for Individual Freedom; Citizens for the Republic; Citizen Power Alliance (NY); Civitas Institute
Cherry Valley, Inc. Trustees; Clear Skies over Orangeville (NY); Climate Common Sense (DE); Coalition for the Preservation of the Golden Crescent (NY)
Coalition Opposed to Additional Spending and Taxes; Concerned Citizens of Cattaraugus County (NY); Concerned Citizens for Sustainable Energies (NY)
Concerned Citizens of DeKalb County (IN); Concerned Citizens of Smelser & Paris Township, Grant County residents – Grant County (WI)
Concerned Citizens of TrempealeauCounty– Trempealeau, Monroe, Rock,La Crosse, and Dane counties (WI)
Cornwall Alliance for the Stewardship of Creation; Ellis County Environmental Awareness Coalition; Energy Integrity Project
Energy Makes America Great, Inc.; Finger Lakes Preservation Association (NY); Forest Voice – St CroixCounty (WI)
Forward Wind Factory Victims Coalition; Fond du Lac County (WI); Freedom Foundation; Friends of Lincoln Lakes; Friends of Maine’s Mountains
Friends of Saddleback; Friends of Spruce Mountain; Glenmore Constitutional Coalition (WI); Grantcosetbacks (IN); Great Lakes Wind Truth,US
Illinois Wind Watch; Institute for Liberty; Interstate Informed Citizen’s Coalition, Inc.; John Locke Foundation (NC); Lee County Informed (IL)
Let Freedom Ring; Less Government; Madison Matters (NY); Mansfield North Central Ohio Tea Party Association (OH); Mercer County Citizens Against Turbines
National Tax-Limitation Committee; Partnership for the Preservation of the Downeast Lakes, Watershed (ME), Protect Our Lakes (ME), Protect Richfield (NY)
Rio Grande Foundation (NM); Sardinia Preservation Group (NY); Save Our Beaches (Cape Cod, Massachusetts); Secure America’s Future Economy (DE)
Sheboygan County Communities for Responsible Energy (WI); Stop Lookout Windpower (PA); Taxpayers for Common Sense; Tea Party Patriots in Ohio
Tehachapi Area Communities for RESITE NOW; Responsible Energy Development (CA); Texas Conservative Coalition Research Institute; United for Missouri
Virginia Scientists and Engineers for Energy and Environment (VA-SEEE) Central Virginia Chapter; Wells County Concerned Citizens (IN); The Weyrich Lunch; Whitley County Concerned Citizens (IN); Wind Wise –Massachusetts (Cape Cod); Wisconsin Citizens Coalition
Wisconsin Independent Citizens Opposing Wind Turbine Sites (Wind Cows)