10.21.2010

Don’t Subsidize Me, Charge Me More


Paradoxical as it may sound, I will sound the trumpet again on this message: if you want greener behavior, don’t ask the government to subsidize you, ask it to charge you more. Here are a couple of recent articles I came across – one from a fairly left-leaning source and one from a fairly right-leaning source – on the ineffectiveness of subsidies to effect wholesale behavioral change.

Here I’m not even talking about (nor are these articles) our present toxic political atmosphere, in which one side wants to give out goodies and the other side wants to paint those goodies as give-aways we can’t currently afford. I’m simply referring to basic human behavior: massive outlays for next-generation infrastructure or heavy subsidies of alternative energy systems simply aren’t going to move the needle.

Here’s what will: seeing the real price tag on what it costs to drive our cars, heat our homes, and take our showers. If we bore even a fraction of what it costs society as a whole, all-in, to provide gas, electricity, and water, we’d all make far greater effort to do sensible things that are good for our pocketbook and good for the environment.

It isn’t sexy, but riding your bike to work, installing a timed thermostat, and not running the water when you’re shaving are all easy to do and hugely impactful for resource conservation. Alas, in our current regime, underpricing causes us to squander what are actually scarce and/or costly resources.

It may sound outrageous to posit that the solution to our mess is not subsidies but higher prices. No politician in their right mind would campaign on such a platform. But that’s what it will take to really get this right. And the longer we get this wrong, the more costly it’s going to get.

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