Wealth distribution in the wrong direction


President Barak Obama has now got his dream car, the hybrid car Chevy Volt, produced only after intervention from government and labour union- owned Government Motors.

In one way it reminds us of the German predecessor: the Volkswagen. A car not produced according to market demand, but for dubious ideological targets. However, the new ‘Voltswagen’, on sale for $41,000, costs, when all subsidies are accounted for, about $81,000. Not only is it worlds apart from the original Volkswagen, but its creation signifies a distorted economy: taxpayers funding a vehicle which can only lead to loss and a shortage. In addition, comes the government subsidy of $7,500 for purchasers of the car, a nice addition for ‘upscale urban liberals’, some of Obama's strongest supporters.

People who are trying to justify such immense subsidies argue that this is necessary to get the electric car industry up and running, because they are in their infancy. The truth is that electric cars of some sort have been around for a century and the market still did not absorb them. Why supply when there is no demand?

But would it be a good thing if we all switched to electric cars? The point is to reduce CO2 emissions, right? But in some regions, we get our electricity from CO2­spewing coal. The more electricity pulled from the grid, the more coal is burned, essentially replacing dirty oil with dirtier coal (which is why some coal backers see much promise in electric cars). Studies confirm that China – which is allegedly “beating us” in the race to a green economy – would produce vastly more greenhouse emissions if it switched to electric vehicles.

Government intervention stymies market forces. Furthermore, the creation of the ‘Voltswagen’ blatantly derives an ‘is’ from an ‘ought’: there should be electric cars, whether supply is economically feasible or demand is there.