If progressives want a Clean Energy Bank, they need better economics
One of the most excellent pieces of the climate bill now awaiting defenestration at the hands Senate Blue Dogs is its creation of a Clean Energy Bank that would help finance nascent clean energy projects. More specifically, it is “an autonomous Clean Energy Deployment Administration (CEDA) within the Energy Department” that would “provide a suite of financing options, including direct loans, letters of credit, loan guarantees, insurance products and others” for “energy production, transmission, storage and other areas that could reduce greenhouse gases, diversify energy supplies and save energy.”
For a clear take on why this is needed, read John Podesta and Karen Kornbluh.
Crucially, supporting the policy means acknowledging that actually existing markets are not perfect, and that government support can help correct market failures and achieve public goods that the market alone will not provide. Being a conservative these days, of course, means absolute ideological opposition to that notion. Naturally, conservatives are now coming out in opposition to the bank, as The Wall Street Journal reports.
The WSJ piece itself isn’t that interesting, except insofar as the utterly fallacious comparison of the bank to Fannie and Freddie Mae reveals something about current conservative pathologies. It’s basically a lightly rewritten press release from the libertarian Cato Institute.
What’s interesting to me is that while liberals are predisposed to support the idea, public financing has worked in this country and others, and the economic downturn cries out for stimulative spending, the conservative bias against public investment is shared by mainstream economics. The bedrock libertarian view that government intervention in the economy slows growth and reduces overall economic productivity is woven into the DNA of current economic orthodoxy, even “environmental economics.” It’s part of the ambient lay economics (if you will) that influences all public policy discussions in America. Government can’t do anything right.
Liberals really need to start thinking about trying to mainstream some alternative economic approaches (e.g., ecological economics, or even behavioral economics). Otherwise they’re constantly going to be in the position of advocating for policies that get them tut-tutted by economists and Blue Dogs alike.