People often feel a little pious when they actively support regulatory efforts that subsidize the use of alternative energy sources. And why not? When politicians and environmentalists claim such regulations help alleviate our nation’s dependence on fossil fuels, reduce our air pollution emissions and decrease our contribution to global warming, what could possibly be wrong with supporting greater government control over the energy resources of our national economy?
Well, there is much to consider in the process of creating public policy. Let’s explore how environmental or energy policy would be crafted in any nation that is a representative democracy.
We’ll start with the most important question concerning energy sustainability and global warming: Who decides if the current rate of fossil fuel consumption is too reckless for a morally responsible generation to enjoy? Who decides the optimal level of carbon dioxide production for us all to tolerate when producing the energy and goods that the citizens of a prosperous nation require?
We must remember that making a democratic government the arbiter over these important questions doesn’t remove the inherent struggle that exists between the many competing visions of how our nation’s energy resources should be used. Handing the over the reins to the government merely changes the process by which these important decisions are made.
Observation #1: Our energy resources have multiple, competing uses — even across future generation. Such competition will always exist, whether decisions over using these resources are made in the public or the private sectors.
The presumption justifying greater regulation is that citizens in the private marketplace pursue only their self-interest when allocating their income dollars across competing energy resource uses. If the voluntary actions between buyers and sellers in the private energy marketplace fail to reflect the “better angels of our nature,” what’s wrong with electing politicians to hire expert bureaucrats to regulate our scarce energy resources more effectively?
Well, we must be consistent in our assumptions about human nature. These same citizens will also pursue their self-interest when they cast their ballots in the public sphere. When choosing between candidates for office with competing platforms, voters will not suddenly grow the halo and wings of angels when closing the curtain behind them in the polling booth. They will vote their own self-interest.
Observation #2: Self-interest guides citizen choices in both public and private decision making processes.
But isn’t citizen influence over resource allocation decisions made in the public sector more equitably distributed than in the private sector? Wouldn’t the “one-person, one-vote” characteristic of a democracy help us more equitably select the right legislators, who will in turn appoint the right bureaucrat experts, who will then create policies that are more likely to reflect the public interest?
In short, the answer is no. While people and organizations with higher incomes will always have more sway over what all is produced and how it is all distributed in the private sector, they will also have more sway over how public policy is created, and how its benefits (and costs) are distributed. Why? Much political influence resides beyond each citizen’s allocation of one vote. Let’s take a look.
Political action groups (PACs) seek soft money donations to promote political party platforms. Beltway lobbyists seek to influence legislators and bureaucrats on behalf of well-funded for-profit and non-profit organizations. Highly organized and informed special interest groups seek public policy with localized benefits that are to be paid for by uninformed and unorganized taxpayers.
Indeed, OpenSecrets.org tracks lobbying expenses and PAC donations in the U.S. each year. In the Presidential election year of 2012, over 12,000 lobbyists helped their organizations spend $3.3 billion trying to influence legislators and bureaucrats in their design of public policy. Further, PACs raised over $1.4 billion that same year, with Democrats raising a slightly larger share of all funds than Republicans.
Observation #3: Power and influence are unequally distributed in both the public and private sectors of a democratic nation.
The reality is this: If self-interest dominates citizen voter choices over competing energy policies, and if their influence over the legislative process is unequally distributed across society, then it does NOT automatically follow that public policy will be more economically efficient or environmentally effective than the aggregation of all the independent, voluntary activities between consumers and producers in the private sector.
This implies that the process of both private and public sector decision making in resource allocation must be clearly understood and directly compared before we can determine which process for allocating our energy resources would be in the best interests of our nation. In my next article, we will explore the challenges of efficiently and effectively implementing public policy over our energy resources.