Tax and Spend

How the Rural Electrification Administration cost taxpayers and made everybody poorer.

"The economic effects, including many negatives ignored by FDR, are many. This means that the projects decreased wealth and welfare. Every dollar of capital diverted to a money-losing capital investment is a dollar of capital diverted from one that may have been wealth-creating. Value creation and value destruction are both very real processes. Value creation requires a common sense criterion. The present value of the benefits must exceed the present value of the costs at the market’s cost of capital. The government’s capital costs are seemingly low because it uses coercion to extract funds from taxpayers. This is not a free market rate. But by extracting those funds, it prevents other projects that are economic. It crowds out beneficial capital investments. FDR’s decision was simply central economic planning along the authoritarian lines prevalent at that time in Germany and the Soviet Union." 

Whenever the government gives a loan or loan guarantee, the people should recognize the recipient couldn't get a loan in the marketplace for a reason.

"“A significant amount of overhead power lines serve a minority of the electric customers, or about 90 percent of the lines cover 10 percent of the country’s population including many seasonal and vacation homes."

Wow. The negatives are overwhelming.

"Electrifying rural America by subsidizing the cost of running long and uneconomic transmission lines to rural farms, ranches, hermits, and owners of vacation homes – subsidies that continue to be lobbied for six decades later – was not a boon to America. There were a number of private firms doing research into economical on-site generation of electricity after WWI using wind, gas, and solar power because, seeing the rapidly growing demand for electricity and understanding that reaching remote areas with transmission lines would never be economical, they foresaw a vast market for on-site generators. Once the Roosevelt Administration announced that ‘every American had a right to access to electricity,’ this private research stopped entirely. The irony is that in the 1970′s, during the alleged ‘energy crisis’, many ignorant people sought to argue that ‘the free market let us down’ by failing to do research in alternative, renewable energy. That all the gigantic wind turbines in the world are subsidized by governments is a consequence of this misguided consensus; namely, that free markets would never research renewable energy so it’s up to the State to do it."

Government is the impediment to the development of alternative energy it claims to promote.