The Fight Against Gravity | FREE WHITEWATER
FREE WHITEWATER

The Fight Against Gravity

The Trump Administration wants to bolster industries that are market failures, with coal as an example.  Catherine Rampell writes of that effort in The Trump administration learns that fighting gravity is hard:

The Trump administration is learning that, as new data show that the industries it has worked hardest to prop up — through bailouts, tariffs and other favors — continue their descent.

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Trump (incorrectly) blamed the industry’s problems on overregulation, including by the Obama administration. So the president is scrapping the Clean Power Plan, which was intended to reduce carbon emissions at coal-burning plants. His administration has also been rolling back other regulations, including one regarding the disposal of coal ash  and another concerning mercury emissions.

Then there were the many direct and indirect coal subsidies, including proposals to invoke national security so the administration could require power plants to keep financially non-viable plants running. Just last week, the Energy Department announced $38 million in new federal funding for research into how to keep old coal plants online.

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U.S. coal consumption in 2018 was at its lowest level in 39 years, according to another recent EIA report. More coal-fired plants closed in Trump’s first two years in office than in the entirety of Obama’s first term.

To be clear, that’s not because of anything Trump has done. It’s because of what he can’t  do.

Despite Trump’s claims, the main challenge for coal is not regulation. It’s technology. Hydraulic fracturing, or fracking, in particular, has made natural gas a much cheaper alternative. Productivity gains have also been rapid, faster than many analysts expected, making natural gas even more competitive.

The local version of this approach is a decades-long effort to manipulate Whitewater’s economy through subsidies for favored businesses and regulations against disfavored ones.  For it all, Whitewater has performed worse since the Great Recession, and is a low-wage economy.  See Reported Family Poverty in Whitewater Increased Over the Last Decade and A Candid Admission from the Whitewater CDA.

Rampell’s right: defying gravity is hard (and much too hard for the national and local manipulators).  Government should abandon business manipulation (however crafted) and devote its efforts to assistance to needy individuals and households.

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