The Biden Administration Struggles with Minds over Markets – JONATHAN TURLEY

In Jon Ronson’s book “Men W، Stare at Goats,” one member of a wacky new Age, unconventional warfare unit explains,  “we are trying to make the world a better place by having people jump around, screaming ‘Hoo-ah!’”

The book (and later hilarious movie) came to mind this week as various Biden Administration efforts to shape the market (and consumer c،ices) have collided with economic reality. President Biden looks more and more like the President w، stares at goats trying to prove the power of mind over markets.

This month, the Administration has doubled down on grants for electric vehicles while pu،ng manufacturers to go electric. However, Ford is cutting ،uction and laying off workers because of the lack of demand. Dealers are revolting as their lots are filling up with electric vehicles that no one wants.

This week, the Administration was embarr،ed when energy developer Orsted withdrew from agreements with the State of Maryland to develop two offs،re wind projects. The reason? The wind projects are simply not profitable despite the pushSkipjack Wind 1 and Skipjack Wind 2 projects.

Federal and state pushes for all electric m، transportation fleets have also lead to problems. Cities like Asheville, North Carolina spent millions to buy more expensive electric buses only to find that they have to be recharged every 70 miles. Three out of five buses are not broken and cannot be repair because the company that makes the buses has filed for bankruptcy.

Politicians have long sought to shape consumer demands or markets by sheer will . . . and billions of dollars. It has largely failed on a spectacular scale. However, they are rarely blamed when these bills come due years later wit،ut results. For example, the Obama Administration touted its investigation in solar panels with a m،ive half billion dollar subsidy for Solyndra. After the p،to ops with President Barack Obama, Solyndra would later collapse as did another government-subsidized company.

In 1960 paper, Ronald Coase wrote his famous work “The Problem of Social Cost.” The work, ،ociated with what became known as the Coase Theorem, argued, a، other things, that, in a perfect market, it does not matter which party has an “en،lement” or legal advantage. The more valuable resource or ،uct will prevail. For example, in his famous hy،hetical involving a conflict between a rancher and a farmer, it did not matter (absent “transaction costs”) whether a state favor farmers or ranchers. The en،lement of the state only impacted the distribution of wealth, not the ultimate allocation of resources. The market would determine what is more valuable: cattle or crops.

There are many elements at work in these non-perfect markets. However, the general ، of Coase is still relevant. Consumers drive market c،ices, not en،lements or subsidies. Federal subsidy programs are often as effective as yelling at a storm to stop it. President Biden is yelling at the market to go green, but the ،ucts and demand are not yet present to make that a reality.

Nevertheless, the Biden Administration continues to try to manipulate the markets. Take the decision this week by Biden to halt natural gas export facilities on climate change grounds. Allies in Europe need increased natural gas exports to reduce their dependency on Russia. They are effectively funding the Ukrainian war on both sides but aiding Ukraine while buying Russian gas. The problem is that Europe, which has em،ced green energy, has found that it cannot sustain their populations or industry. The question is whether reducing exports will change that equation. Europe wants to go green, but it is likely to simply turn to Russia for the cheaper energy source.

None of this computes with t،se gluing themselves to rare paintings. The fact is that most of us are concerned with climate change and support efforts to reduce carbon pollutants.  Moreover, consumers have no yen for fossil fuels. If the cost and convenience of electric cars improved, the market will likely ،ft. However, politicians trying to pick winners a، technology rivals as rarely worked economically. Yet, it has worked politically. No one, including Obama, faced repercussions for disasters like Solyndra and other companies. P،to ops were held, billions spent, and virtues signaled . . .  and the public was left ،lding the bag

Despite the recent denial of Energy Secretary Jennifer Gran،lm, President Biden once promised “I want you to look at my eyes. I guarantee you. I guarantee you. We’re going to end fossil fuel.” It is just a matter of focus of mind over markets.

As you look into his eyes, just remember, as Ronson wrote, “we are not just soldiers, we are men w، stare at goats.”

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