Consulting by RPM || Free Advice Blog

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   Tel says:

   at

   I think you have slightly the wrong angle on the whole solar thing.

   The reason government offers special favours to one industry is inevitably to buy votes, thus creating a client class dependent on government for their livelihood. Once you have decided to offer favours, it doesn’t look too good if Johnny Foreigner ends up the beneficiary of the largess that’s supposed to purchase votes, because the foreign entities will absolutely never vote for you.

   It would be a bit like you went to the supermarket to buy milk and eggs and as you are attempting to pay for the goods, someone runs in, swipes your payment out of your hand and runs out again, then the girl at the checkout still expects to be paid. That would annoy you, right? Well that’s the same kind of annoyed that governments feel when to go to buy votes but the wrong guy gets the pay-off. Now you can understand their justified pain over this.

   As I explained in my testimony last year, the federal tax code artificially boosts the market share of wind and solar power in the United States. Now, the new tariffs enacted by the Trump Administration will reshuffle that artificially high amount, reducing the number of workers in solar installation (for example) while boosting the number of workers in solar manufacturing. Even so, the total number of U.S. workers in “solar” is still artificially high, compared to a situation where the U.S. tax code just applied the same rate to all firms, and didn’t have special credits for some domestic firms, or penalties on foreign imports.

   If we presume neither imports nor exports, it’s pretty safe to also presume that all panels produced will also get installed so it’s gonna balance out OK in the long run. What else would you do with the solar cells? As the dear departed Bill Leak and his Indian friends discovered, you can’t eat them.

   So using a tariff might reduce the total sales, but that’s an artificial number so if government wants more or less sales they can simply tweak the incentives and choose whatever result they want. A real free market guy would consider that if the distortion is in the direction of more sales of solar panels than the ideal (IMHO it is leaning in that direction) then anything that reduces total sales would be overall a GOOD THING because it helps undo the distortion. In reality though, none of that matters… the controlling factor is the price of votes, not the price of solar panels.

   http://cdn.newsapi.com.au/image/v1/cf730e5abf313d5e92b3130847f486b4

   Gratuitous Leak cartoon designed to piss off the foreign aid do-gooders, which might not be entirely on topic other than something about solar panels and government interference.