Posted: December 21st, 2009 by Militant Libertarian
What It Really Is and Where (and When) It Really Thrives
This is Part 3 of a 3-part series.
A True Public-Private Partnership in the Green Economy
Here is what I propose both sides do in order to facilitate a green economy filled with green jobs. That, ultimately, should make everyone happy: liberal or conservative, capitalist or socialist, entrepreneur or politician.
First, as already mentioned, both sides should stick to what they are good at and not attempt to move over into the other’s field of expertise. In the past, government has attempted to run business and business has attempted to run taxes. Neither ever has a good result.
From government, all that is needed are permanent, set tax breaks for energy production. In fact, the tax breaks should take the following course: your business is tax free until your income (profit) reaches a specific point. At that point, your tax level kicks in and you become like any other business. Period. No conditions about what kind of energy, where it’s coming from, nothing. Whether your energy is produced through coal, burning car tires, or clean sources doesn’t matter.
Likewise, those who invest in energy investments will also receive a full tax credit for all monies invested into energy businesses who qualify for the above breaks. This means that investors will be incentivized to fund new energy projects, which in turn creates capital for those projects to begin with.
Before you start screaming that this won’t do anything to produce green energy, hear me out first. Remember, government is only good at taxation, not at deciding how to run a business.
Now for the other half of the equation: capitalists and their businesses. These incentives will have two immediate effects: new businesses in energy will have a chance to thrive and become more viable as their debt load is reduced with the elimination of their tax burden. This also means that they can more intelligently disperse their funds (invested capital) for the long-term without having “spending frenzies” to produce expenditures to avoid taxes.
At the same time, these businesses will obviously have to become profitable if they ever wish to pay off their investors or become viable for the longer term. Thus, they will (if they are sound) eventually reach a point where they no longer qualify for the tax break. Therefore, they will not be given the incentive to create their entire business model based on those tax breaks—as has happened in the past.
The third hand in this game is the consumer. Since consumers demand not only low-cost, abundant energy, but now are also demanding green energy solutions, that market will guide the new business ventures into that field. With business comes jobs, of course.
Provided those businesses do not attempt to get involved in government and the government does not attempt to get involved in those businesses, the whole system will work.
This is where the other half of human nature comes into play—especially given the now well-established corporate cronyism and insider dealing that pervades Washington from the White House down to the federal bureaucrats in various agencies. Neither is likely to be able to keep their hands off the other for very long.
This is where the rest of us enter the picture. Our job will be to once again monitor and police government as we were intended to do. When our nation was formed, the founders who set down its framework did so expecting the free people of America to be always leary of government and governmental partnerships with other entities (businesses, other governments, etc.). That’s been lost and must be regained for this plan to work.
Otherwise, we will continue to have business as usual with business and government working hand-in-hand to undermine all of the gains made by capitalism in the market.
The quest here is not to create false hopes of a new, green economy through government incentives and higher inflation due to injections of government cash into the market nor to allow business as usual to continue to be conducted.
Instead, our goal is to have government and business working together without being in bed together. Some will argue that business is only out for itself and will screw everyone in its drive to produce profits. Others will argue that government cannot properly oversee business without a strong understanding of business to guide it.
I would posit, however, that neither view is right. Private business is always out to produce profits, of course, but history has shown that when government does not interfere with business, the communities and people involved in the business are always bettered. On the other hand, when business is regulated by government and/or controlled by it, bad things are always guaranteed to happen.
It’s with regulation that the coming of business inserting itself into government and thus controlling its competition and profitability happens. Every piece of regulation or deregulation in the U.S. has come about because someone, somewhere profited by it at the expense of someone else in the free market. This is how businesses have learned to use governmental power to enforce their own monopoly.
Competition comes not from government regulation or government involvement, but from a truly free and open market wherein anyone with the gumption to enter the game can compete with everyone else already in it. Sometimes those newcomers succeed and supplant the old timers. Other times, they fail. Always, though, they create competition and drive innovation.
That is the very basis of my proposal here and the cornerstone of what makes America what it is.