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The government should stop all subsidies to energy consumption, and if it still wants to spend, should fund alternative energy research through matching funds.

When the government provides subsidies it produces an inefficient economic system. We oftentimes subsidize products anyway because of non-economic interests, such as keeping an industry strong because it is needed in wartime (steel), or promoting independence (food, oil). We currently fund wind, bio-diesel, ethanol, and other alternative energy sources in order to reduce future energy dependence on other countries.

Trouble is, funding consumption reduces the need for these producers to compete, and reduces the speed at which they innovate. The subsidies create a false "kiddie pool" market that undeveloped and under-prepared businesses can still profit in. Why would a company spend MORE money on risky technology or R&D, when it can compete where it is right now? Why would anybody give up the bird in their hand for the potential of two in the bush? Funding consumption produces lazier companies.

Instead we should reward the risk takers and innovators. The market system is the most efficient system out there, even Karl Marx ceded that point. We should use the profit motive instead of fighting it. Many will give up the bird in hand for the possibility of ten or twenty more in that allegorical bush. America is built on the shoulders of innovators, we shouldn't turn away from that tradition now.

Learn more about this author, Michael Isaacson.
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