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Can someone explain to me why we are poopin’ in our panties about China’s solar power subsidies?

Suppose you had a pretty big yard, 2 acres. And your neighbor comes over one day and says, “I have a big lawn mower, a huge expensive one. I just like having a big mower, too big for my own purposes. It really costs a lot, but my dad left me an inheritance and I like the prestige of having the biggest mower in the state. How about if I mow your lawn for my marginal cost, plus a little bit? Say, $35?” 

You figure that you would have to buy a mower, plus spend time mowing, plus upkeep. It would cost you at least $100 a week to do the same thing. So, you say, “Sure!” 

Can someone explain to me why we are poopin’ in our panties about China doing essentially the same thing with solar power technology? And why U.S. government officials are claiming that the answer is that WE, the US, HAVE TO BUY A REALLY BIG MOWER, TOO? For some reason, gigantic world-wide over-capacity, subsidized by tax dollars, is the answer for Obamanoids like this guy

“There is no question that renewable energy companies in the United States feel pressure from China,” said David B. Sandalow, the assistant secretary for policy and international affairs at the United States Energy Department. “Many of them say it is cheap capital, not cheap labor, that gives Chinese companies the main competitive advantage.” 

Is China behaving badly? Yep. And if I were a Chinese taxpayer, I’d be pi****. But why is the US upset? There is no way that the resulting price of solar technology and equipment is going to be more expensive for us. UNLESS, of course, we try to enter the race and buy a really big lawn mower, too. 

The “worry” is that China will achieve world dominance and then raise prices. Idiots used to make the same argument about Wal-Mart: once they drive out the competition, they will raise prices. Two problems with that argument. 1. It’s not true, empirically. It just never happens. 2. The only possible truth to the argument is with respect to the “correct” price, which in the mind of the subsidizers is the price in the US if we spent billions in subsidies. Friends, subsidies are a COST, not a benefit. 

Let the Chinese mow our solar lawn, if they want to. (Angus has tried to make this pointbefore, as have I. Angus may have said it best here. And we’ll probably get chances to say it again.) 

We could do what politically connected firms here in Europe urge us to do which is to pick our own pockets to subsidise them. We could do what has been done in the US which is to pick the pockets of USians so that politically connected firms there can be subsidised: and then go bust owing the taxpayers $500 million and change.

Or we could be sensible like Calvin Coolidge, that most under-rated of US Presidents. It is said that when the messenger arrived from the Treasury, delivering his first paycheque as President, he said “Thank you, come again”. Which is the correct response to someone offering you money.

If the Chinese Government wishes to scalp its own citizens then that’s something for the Chinese citizens to complain about. That the money is spent on making solar cells, solar panels, cheaper is, as far as we’re concerned, just great. We get to buy cheaper solar panels and, presumably, save Gaia at a less eyewatering than otherwise cost to our wallets.

The correct response to the foolishness of other governments in soaking their own taxpayers to subsidise their own industries is for us to buy as much as we possibly can of these newly cheaper goods. For us to fill our boots, for that subsidy over there is making us richer.

The incorrect response would be to insist that we should institute those same subsidies ourselves for that just makes us poorer and everyone else who buys the products richer.