Seven Days ran an article recently about Vermont’s solar industry and the impact of federal cuts to the subsidies they’ve enjoyed for years. The headline authors called the cuts an “attack.” No, it’s not an attack. No private business is entitled to taxpayer funds to keep it afloat. Be grateful for what you got and say thank you. In fact, if anyone’s been attacked in this process, it’s the taxpayers who are forced, under threat of the government’s legitimate use of violence, to surrender our hard-earned money to these companies, getting nothing in return.
Of greater concern is the notion put forward that these taxpayer-dependent businesses are considered a “pillar of our state’s economy.” It’s a sentiment shared by many in our governing class who religiously preach that these so-called “green” jobs are an economic boon rather than the boondoggle that they are. It should be obvious – though it is apparently not – that a pillar unable to support itself is a pretty crappy choice for holding up anything else, like, say, the state economy.
This economic model is unsustainable. Totally backasswards. True pillars of any economic system – the things that hold everything else up – need to be not just self-sufficient but excessively sufficient, organically earning enough to sustain not just their own operations but surpluses large enough to contribute to the tax base. There’s a term for this, and the Left hates it: profitable. “Green” jobs in the solar sector ain’t that.
According to the Seven Days article, “Homeowners who install a typical $35,000 array can deduct $10,500 from their federal income tax bill.” A couple of points here. First, in order to take the deduction, someone has to owe $10,500 in federal taxes, so this is really a wealthfare program. But more importantly, that $10,500 is being removed from the treasury. Whatever else that money could have been holding up, pillar-style collapses to the ground and shatters. Poor economic architecture.
For any enterprise/system/thing to be sustainable, what it produces ultimately needs to generate more value than it costs to create. You can’t sell hamburgers that your customers value at $9 if it costs you $10 to make one and expect to stay in business very long. You either need to find a way to produce your hamburgers for $8 a pop or improve their quality to the point where customers are willing to pay $11 to eat one.
The solar industry’s problem, assuming the example from the article, is that it costs them $35,000 to produce a product that their customers are only willing to pay $24,500 to own. The rest has to be extracted from the taxpayers at gunpoint by the IRS. This makes it not a profitable, sustainable pillar of our economy, but an unprofitable, unsustainable one dependent upon the actual pillars to hold it up for as long as they’re able and willing.
And this is why the Left’s disdain for and outright hostility toward profit and profitable enterprises is so dangerous. Without profit, there is no tax base. And without a tax base, there is no support for things that genuinely need government funding.
We are creating an unsustainable system that is bound to collapse when too many private sector business models are based on somehow raking in taxpayer funded government cash – energy producers, the entire non-profit sector, the electric vehicle industry, healthcare, education, agriculture, housing construction (another article this week described how subsidized “affordable” housing costs over half a million per unit, taxpayers picking up the tab)…. It’s the old story of too many people in the cart and not enough pulling. Or, to keep with the analogy of this piece, too many people sitting on the roof, and not enough pillars – genuine pillars – holding it up.
I hope the solar industry can, in fact, evolve into a pillar of our economy. We need more pillars! But to do this, they’re going to have to figure out how to create a product they can profitably sell for $24,500 or one that customers are willing to pay $35,000 to put on their roofs because our current actual economic pillars can’t continue bearing the weight of that $10,500 subsidy. Good luck, I wish you well, and if the technology is improving the way industry leaders say it is, you should be able to get there.
But I am not encouraged by quotes from Sun Commons’ Mike McCarthy or Catamount’s Jarred Cobb.
McCarthy’s reaction to the subsidy cutbacks is to finagle other ways to extract taxpayer money rather than focus on making an organically profitable product. As for Cobb, he says, “I hope that there’s an ethos in Vermont of: F–k whatever’s happening in Washington — we’re going to keep doing things the way we’re doing things.” Well, that would be stupid because the way we’re doing things in Vermont is unsustainable – a concept a true environmentalist should be able to understand.
