Government Control and Subsidy of Energy vs. Private Sector Investment Essay

A subsidy is a stipend from the government to a business to encourage the continual use or development of a engine room or product that is considered to be useful or beneficial to the society. Most often, the money (or subsidies) is coming like a shot from taxpayers. This is where Milton Friedmans signature phrase, at that places no such thing as a unaffectionate lunch comes in to play. A unit of a product or service may be free for one person, someone or something is enduring an opportunity cost. Currently, renewable energy sources such as wind and solar power are being subsidized by roughly $24 million a year because of the perceived environmental benefits that go along with green technologies. However, renewable energy companies such as Solyndra become gone bankrupt and the government has financial supported them to keep them running via subsidies. The argument for go on these subsidies is that wind and solar are still in the start-up phase in the industrial world and ha ve not yet reached large scale marts. Unfortunately, it is highly unlikely that these companies will ever be largely profitable because renewable energy, with a few exclusions, are unable to reach the profitable market borderline that generating plants fueled by coal, natural gas or nuclear can.While the government tries to focus their support on said renewable energies, only providing limited tax breaks for the cloistered oil companies, the US esoteric firmament has produced a substantial increase in oil. 2011 was the third consecutive year of higher interior(prenominal) oil production and, at the same time, natural gas bring output reached an all-time high. Over the aside five years, about two thousand new jobs have been created in the oil and gas application while employment growth for renewable energies has been limited at best. With many of the recent failures of several renewable energy companies, employment has declined in this area during several periods. The renewa ble industry will also contend to prosper because they rely too heavily on the government for support. The government has taken billions of dollars and will emplacement it in this industry with little to no return for the enrichment of the economy and society. Friedman makes a rather sarcastic causerie on activities like this by saying, If you put the federal government in charge of the Sahara Desert, in 5 years thered be a shortage of sand. This is an example of rent-seeking.Rent-seeking is a term, utilise by economists, to describe actions that involve a political process of taking wealth of others and getting basically a loss of wealth. Without the incentive to compete to raise and gain money, the renewable energy industry doesnt feel the need to produce more efficient and cost effective products or services. On the put away side of that, since most companies in the oil industry are in the private sector, the profit but is a large enough incentive to supply valued goods an d services at reasonable prices. If private sector companies do not continually improve or develop, they will quickly be weeded out. Since the private markets are decidedly competitive, they are continually searching for the sweet spot in the market that assures a large and readily available supply of energy and the cleanest yet practicable balance of the work of our limited resources, all at the lowest price possible.Despite the fact that for more than a decade, there has been a large amount direct taxpayer support, renewable energy still cannot meet the market implore and, therefore, the subsidies for these areas should be significantly reduced if not completely done away with. If politicians are truly touch on with cutting greenhouse gas emissions, a better allocation of federal spending would be to organise subsidies and incentives towards natural gas and nuclear power plants. These clean-burning fuels can heat our homes, power our vehicles, and generate electricity for the Statess households and industries a lot more cheaply and reliably than renewable energy can. If America is not careful, it will quickly fall into crony capitalism.Crony capitalism, in layman terms, is where private businesses focus on doing political favors rather than the consumer market because the government uses spending, regulations, and subsidies to benefit businesses that provide political support. Instead of trying to foot winners and losers, the government should create a competitive marketplace with fair rules, no subsidies, and allow the private sector to prosper. One great aspect of America is the freedom to continuously change business strategies and marketing to accommodate to change. Like Milton Friedman said, Many people want the government to protect the consumer. A much more imperative problem is to protect the consumer from the government.