Cato\'s Fall Guys

Update: If you are Brooke Oberwetter, Justin Logan, Tim Lee, or Jude Blanchette, stop reading now. This post is not for you. In fact, just give up now.

Three other interns and I are playing the policy debate equivalent of the Washington Generals to the Harlem Globetrotters of more senior staffers; that is, we are acting as fall guys to help them prep for a debate against CSIS. The topic our group must defend:

RESOLVED, the United States should substantially reduce its foreign dependence on oil through increased government support for the development of alternative automobile fuel technology.

We plan to focus on four general lines of argument:

  1. Environment: Pretty self-explanatory. Cleaner fuel alternatives will help the environment by reducing harmful emissions. We may throw global warming in there as well.
  2. Foreign Policy: By reducing our dependence on foreign countries, especially in the Middle East, we will no longer be funding dictators, anti-liberal societies and terrorism. Further, we won't need to make foreign policy compromises based on entangling alliances, nor will we feel as obligated to protect our "allies" in the region.
  3. Poverty: We will not argue in favor of investing in alternatives on the grounds that we may run out of fuel someday because that argument is silly. Everyone with an ounce of economic sense knows that we will never run out of oil; as oil becomes scarcer, the price of oil increases, discouraging consumption and making substitutes that much more attractive. However, this does make the lives of the poor more difficult. So we will argue that the government should get ahead of the technology curve and start developing cheaper alternatives now, to avoid prohibitively expensive energy in the future.
  4. Economic Stimulus/Stability: Dependence on foreign fuel makes us vulnerable to embargoes, supply disruptions, and extreme price volatility. Subsidizing alternative fuel technologies may give U.S. auto makers an advantage over their foreign competitors, thereby stimulating the economy (relative to the rest of the world, at least).

Remember, our job is only to play devil's advocate here and come up with the strongest arguments for the position we've been given.

Right now, I'm looking for additional arguments and more detailed subcategories of the arguments listed. Also, I'm looking for policy papers from think tanks that support this sort of thing. My familiarity is mainly with libertarian and right-of-center organizations who generally oppose these kinds of subsidies. So while I have found lots of papers against government funding alternative fuel technologies, I'm not sure where to look for arguments on the other side. Suggestions welcome.

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the talking dog is

the talking dog is absolutely right about the defense budget- though he should mention NASA and the department of energy as well (unless he considers them indistinct from the pentagon which isn't entirely unfair.)

you may also be interested

you may also be interested to know (if you don't already) that part of the DOD budget is also an effective subsidy of the hitech industry. Many funded devlopments are "dual use" which means that companies like Boeing turn around and sell the the product for profit in the civilian world. As I've detailed on another thread this amounts to public risk/private profit and is a good example of the sort of military Keynsianism that's been fueling our economy at least since Keynes himself was around.

And the amount of subsidies

And the amount of subsidies we give to the coal, gas, and nuclear industry could be redirected as well (though better to just get the government out of the subsidy business altogether).

Matt27-- As bookkeeping


As bookkeeping matters, both the DOE and NASA budgets (both of which have heavy DOD overlays as it is; can anyone figure out, for example, who pays for Los Alamos or for our spy satellites?) are part of the mere 1/5 of federal spending known as "other discretionary spending"-- the only kind of spending Bush and Congress SAY they can do anything about (without, of course, actually doing anything about them, except, perhaps, increasing them at a faster rate than Clinton ever did).

For reference, the other 1/5 each of federal spending is (1) debt service interest, (2) social security transfer payouts and (3) Medicare/Medicaid, none of which directly subsidize the price of oil. You're obviously correct, that DOE and NASA, in their own small ways, constitute the federal government being in the oil business; however, as a simple bookkeeping matter (which fully achieves my salutory free market ends) I think we achieve the same approximation just to count the DOD budget itself; I cannot imagine that DOD and nasa COMBINED are more than 5-10% of the DOD budget.

Yeah, I think I picked up on

Yeah, I think I picked up on that with #4. Look forward to the cites.

Don't forget to mention the

Don't forget to mention the opportunities for diverting taxpayers' money to businessmen who support the party in power. This patronage solidifies support for the regime while appearing to convey wider public benefits.

Micha, There's an argument

There's an argument that alternative fuel industries are huge growth areas for the future, and that government subsidies will be critical to national competitiveness. I don't believe the argument, but it's decent in terms of storytelling (strong US economy relative to other nations key to maintaining strong US foreign policy, etc). I'll find the citations and get back to you.

Check out Drum's peak oil

Check out Drum's peak oil posts. It's a more sophisticated version of point 3 - the issue is not how much oil is in the ground, but how much we can get out in any period of time relative to demand.

Libertarians are not

Libertarians are not defenseless in defense of government when the
alternative is _also_ government. Take a straight-up fiscal argument.
Establish that

(a) dependence on foreign oil will lead the US into wars,

(b) cost of those wars $W is greater than the cost of whatever government boondoggle alternative fuel thing your propose $B, and

(c) The boondoggle will actually make enough difference to prevent the wars

All three of these points are hard but doable. Point A has supporting
history as well as common-sense public choice logic behind it. Point
B is easy, since wars are really frickin' expensive. Point C is your
biggest weakness -- you must establish that wars for oil are actually
wars for oil and not just wars for the hell of it in which oil was a
convenient side-benefit -- ie, if we hadn't made the mideast our
imperial project, we wouldn't just be doing it to someone else

In short, pitch alternative fuels as an alternative not to oil (which
is cheap and sensible) but to war (which is expensive and daft). You
are the side of small government, they the side of the welfare-warfare

Your argument is a good one,

Your argument is a good one, Grant, and we may incorporate it into our general strategy. However, we are under no obligation to make libertarian oriented arguments. Any ideology will do, so long as it's moderately persuasive.

Fall guys? Is this the

Fall guys? Is this the attitude I wanted to see?

Persuasive to whom, though?

Persuasive to whom, though? I guess I'm just unclear on the audience. After all, no argument exists but for the audience to be convinced.

Not sure of the audience. I

Not sure of the audience. I believe Radley Balko will be one of the judges, but even if all the judges are libertarian/conservative minded, I expect them to score based on arguments persuasive to the "average man," and not just libertarians. I could be wrong, though.

Try this: A free market for

Try this:

A free market for oil, though perhaps ideal, does not exist. A reduction in government expenditure and protection of oil companies is unlikely, so government should encourage alternative fuel research to mimic what the market would likely be doing anyway.

- Josh

Both because the oil will

Both because the oil will run out eventually, and because burning it has unpleasant health effects, it would be nice to see some alternatives.
There's some case for government subsidies to produce those alternatives if the private sector has insufficient incentives to do so. There are good reasons to think this is so, the strongest being that almost all of the benefits of a new cheap energy source would flow to the rest of us, rather than the innovating firm. Why would a firm spend a billion dollars on research worth ten billion to us all, if the firm only got to enjoy 100 million dollars in profits?
The case only becomes persuasive if you can argue that the government can produce a sensible mechanism to promote innovation. One mechanism would be to award a huge prize for successful innovations - once they've been delivered. The alternative, up-front funding, has a pretty patchy record, although no doubt it has sometimes worked. Best, Tim H.

To bang on a point made

To bang on a point made earlier and well, the best research is to find out who the audience is, or the beliefs of the judges. Although all bases should be covered, that's where the focus should be. Additionally, if winning the debate is vital, don't be afraid of relying heavily on mere, but good, rhetoric and demogoguery; it always works and it will prepare the A-team to counter it with useful rhetoric and pointed illustrative data.

1. There's a synthesis

1. There's a synthesis between 1 and 3: poor people are most adversely impacted by petroleum-related pollution (refining, spills, exhaust in urban areas, etc.)

2. Don't forget that as oil becomes more scarce, we will get drawn into conflict with emerging users, like China.

You have to be able to support the claim that the market won't be "good enough" on its own. That boils down to something like anticipating a shock, which is essentially a public good like anticipating a 500 ft tsunami in NYC - sure, it might happen, but what rational person would prepare for it? And when Donald Trump (the required irrational person) builds a 501 foot seawall, how does he charge for it and deny access to it? Likewise, you just can't trust people to start buying or manufacturers to start building efficient cars soon or fast enough. 200 million cars in the country, replaced every ten years - can Toyota crank out 20 M Prii every year? I don't think so, and the crisis could occur NEXT YEAR! (Sorry, I'm trying to imitate the appropriate level of shrillity required to make this argument - you should practice that, and a good deal of condescencion, too)

Also, you need to be able to deny that all of the factors already in play - solar, wind, hybrids, fuel cells, biomass, biodiesel, methane hydrate, etc. - simply aren't good enough. Besides, BP and Royal Dutch/Shell have nearly cornered the PV market and will therefore keep solar away from us (it's not true, Sharp and Kyocera are major producers, but your side can play fast and loose with the facts - after all, it's the other side that has to prove they can forecast the future).

I gave my reasons at length

I gave my reasons at length in this post: (please disregard the Schiavo stuff; its of no moment to this discussion)

Short answer: the government IS ALREADY in the energy business (it's called "our defense budget"); hence, government spending on syn-fuel research is simply a matter of diversifying its investments, nothing more, nothing less.

Frankly, my simple proposal (charging the ENTIRE DEFENSE BUDGET as a per-gallon petroleum tax) would, pretty much, end the need for this discussion, because reasonable energy alternatives would AUTOMATICALLY become viable, as a result of the free market.

And consumers could pay for the add-on fuel cost through the massive income tax cut we could afford, by taking around 1/5 of federal spending off of the income tax and piling it on the fuel tax.

Nick, Refresh my memory of


Refresh my memory of Friedman's argument; it's been a while since I read Law's Order. And I have a copy of Skeptical Environmentalist in my apartment, but have not read it yet.

You could frame the enviro

You could frame the enviro argument in a sort of Georgist/Pigouvian way: given that fossil fuel burning creates negative externalities, it might have a net positive effect to tax that burning and earmark the resulting revenue for technologies which reduce those externalities.

If you go this way you'll have to have a response to (e.g.) David Friedman's public choice critique of Pigouvian taxes from _Law's Order_, and also to those papers which refute the "strong double dividend effect" (I'm blocking on the names, but they're referenced in a sidebar in the global warming section of Lomborg's book, my copy of which is sadly on a moving truck right now). But you probably knew that already.

Mighty clever. You are

Mighty clever. You are bound to win. Good luck with that.

Micha this might

Micha this might help-

Foreign Policy: By reducing our dependence on foreign countries, especially in the Middle East, we will no longer be funding dictators, anti-liberal societies and terrorism. Further, we won’t need to make foreign policy compromises based on entangling alliances, nor will we feel as obligated to protect our “allies” in the region.

our policies would not change a single bit if we had an independent energy source. We get most of our oil from Venezuala anyway and our policies were the exact same in the 50s when we were producing most of our own oil (pretty independent I'd say.) Our policies are as they are because the middle east is a "stupendous source of strategic power" (as the state department put it in 1945.) There are several more quotes to this effect from the State Department's George Kennan and others, about how middle east oil is a "lever" of world control and gives us "veto power" over the rest of the world. Middle East intervention isn't about prices; it's about control. There is a rich history in which this idea was developed, affecting the post WW2 rebuilding of Japan and Europe. For instance, Japan was built to be reliant on Oil, depite the fact that they'd be much better suited to a coal-based economy. Japan's oil needs and our oil control gives us the ultimate "big stick" in foriegn affairs.

The right arguments have

The right arguments have been alluded to above, but let met summarize them:

There is currently nothing like a free market in energy.

1. Oil and other fossil fuels receive loads of tax breaks and direct subsidies.

2. Furthermore, they are supported indirectly in a host of ways that involve public money -- decisions involving infrastructure, land-use, appropriations, you name it.

3. On top of that, you have -- as Talking Dog says -- a massive military budget, some substantial portion of which is devoted to defending our oil sources and jockeying with other oil-thirsty countries for new oil sources.

4. On top of all that, you have the externalities -- the health problems that emissions cause directly; the indirect health problems such as obesity that results from living in suburbia (which couldn't exist without cheap oil) and the many ailments that result from eating processed, corn-syrup-filled food products that were grown with petroleum-based fertilizers and transported over long distances in trucks and boats fueled by oil; and, of course, the costs that global warming will impose, which no one knows for sure but are likely to be ginormous.

So. There's no free market. Oil is heavily, heavily subsidized, directly and indirectly, to the great detriment of the public good.

A genuinely free market would long ago have moved quickly toward modular, small-scale, renewable energy sources, with a (small-d) democratic energy grid that would accept and distribute energy from any source.

A proper libertarian would want to remove, to the extent possible, the public subsidies that prop up oil (and really, I wonder why you don't hear more of them saying so). But given the political power and influence of the oil lobby and the politicians it owns, that is unlikely.

Thus, to give clean energy sources some small chance of surviving in this grossly warped marketplace, we must subsidize them.

That work?

On point 3 -- Poverty There

On point 3 -- Poverty

There is a large chance that future rises in oil prices caused by the declining supply will arrive not gradually, but as shocks, caused by either political developments out of the US's control, or by economic miscalculations by major oil producers. This is made more likely by the fact that oil production is effectively an oligopoly. Major oil price shocks do serious damage to the US economy, due to its dependence on oil -- see the last thirty years for more examples than you can use. Therefore, taking steps to cushion such expected future shocks is a rational use of government resources.

Micha, Friedman's argument


Friedman's argument in _Law's Order_ (ch. 4, available on his webpage) is that Coaseian agreements will often produce efficient solutions where Pigouvian taxes will not, because sometimes the least-cost method of avoiding the damage done by pollution involves action on the part of the pollutee, not the polluter. So it's a Coase Theorem argument and not a public choice argument. And note that he specifically says the Pigouvian framework may work better where transaction costs are very high and determining the least-cost avoider is easy, and gives air pollution as a possible example.

I said public choice because thought I remembered him also pointing out that Pigouvian taxes are efficient only if set at the right level, and that for the usual reasons governments are bad at discovering what that level is, and may be so bad at it that they are likely to set the tax at a level that produces a worse result than having no tax at all. But I can't find this in _Law's Order_ now that I take another look; maybe it's from another book or another person, but it's worth dealing with anyway.

Beautiful, Realish.

Beautiful, Realish.


Feel free to enlighten yourselves oh snot nosed brats in service of a libertarian institute supported by corporatism. (Isn't it a bit hypocritical claiming to be libertarian whilst sucking at the corporatist teat when it is equivalent to the neo-conservative government that serves it?)

Is corporate feudalism of the bushco inc. breed now a libertarian political philosophy?

I would take up the argument that freedom itself cannot exist with major commodities, like energy and capital controlled my monopolistic forces. Free and fair markets are necessary to life, liberty, and the pursuit of happiness.

Without it the individual suffers financially at the hands of those in control, their standard of living slipping ever lower as wealth and power concentrates in the hands of fewer and fewer people, all connected into the corporate feudal power structure. This is anathema to individual financial incentive and property rights.

For instance: Jobs are outsourced (with neocon government tax breaks as incentive), workers fired, and executives promoted. Those executives caught up in actual bankruptcy are given golden parachutes. Who suffers? The former workers, who also frequently lose their pensions.

The insider manipulation due to monopoly control of commodities also robs families of their savings. And pushes expenses like mortgages, energy prices, and local property taxes higher and higher. Money normally sent back to local governments by the federal government is now sent instead to corporate feudal partners like halliburton.

In order to overcome the hold that oil based transportation energy has over government and markets, the true cost of these oil wars must be reflected in the price of fuel. at over 100 billion per year, that would mean over a dollar a gallon to pay for oil war as we go.

And subsidies for oil based energy must either be removed or matched with subsidies for domestically produced renewable energy, in order to let free market forces impell a real solution to the devestating cost of these cycles of war and terror over oil.

By government purchase of alternatively fueled transportation for replacement vehicles those kinds of subsidies can be avoided for renewable energy. Remove them all for every energy spource, then the mass production created by government purchasing will bring the cost of these alternatively fueled vehicles down so consumers will save money on expensive gasoline by buying them.

The cost of the wars is bad, but the cost of the business cycles created by them is worse. The fear of fear itself causes consumer, investor, and business pessimism that has curtailed 10s of trillions in economic growth over this latest round of carnage.

The libertarian economic argument is clear lil fellers, have at it. Hehehey. Let me know how it comes out.

Which premise is that, Jim?

Which premise is that, Jim?

I reject the premise, and so

I reject the premise, and so should you. The premise implies that the government does not substantially support conventional energy sources (coal, oil, natural gas) when in fact it does.

Look how much of the funding in the energy bill is earmarked for oil and coal.

Look at the wars in Iraq. $200 Billion has been spent on the war (so far). Shouldn't at least some of that be earmarked as subsidy for our access to foreign oil?

If we were 100% self-sufficient with energy, we'd most likely be able to reduce our defense spending, by what? 10% ? 20% ? This is because we would be safer and also less vulnerable to exernal forces.

There are also other, real costs to relying on external energy supplies, such as its affect on our trade balance, and other economic factors. These are hard real numbers. Shouldn't they be added to the cost of oil?

And then there's the environmental cost due to global warming. One can argue the relability of these reports, however, it's interesting to note how quickly industries seem to accept the problems with CFCs and ozone depletion. Just because the costs of dealing with global warming may be higher doesn't mean the science (which was accepted for ozone) isn't reasonable.

Matt, Let's just say I


Let's just say I don't disagree with you, at least enough to write a response.

There maybe some real

There maybe some real libertarians left, but it is doubtful that they are connected with the your outfit.

In one of those bizarre coincidences, the original name for the Cato Institute was "The Your Outfit."

Copyright problems, I hear.

I think they are miffed?

I think they are miffed? Hehehey. Politics is rough and tumble boys.

Individuals huh? You mean individuals who are invested heart and soul in neo-conservative corporatist empire?

The anti-government propaganda of faux libertarians was coopted years ago by the neocons. Now they are taking over the environmental movement too.

There maybe some real libertarians left, but it is doubtful that they are connected with the your outfit.

The libertarian economic

The libertarian economic argument is clear lil fellers, have at it. Hehehey. Let me know how it comes out.

I suggest you hold your breath while waiting.

hey how come that guy gets a

hey how come that guy gets a response, but my claim that US policy would be unaffected by independent energy policy gets nothing? Maybe you guys just completely agree with me...

that's cool.

Dude, Cato gets over 70% of

Dude, Cato gets over 70% of its funding from individual donors, not corporations. Not that there is anything wrong with accepting corporate funding.

Given the fact that you started off by insulting me, I don't really feel like parsing through your poorly written screed.

We should start by stating

We should start by stating our true situation. We are a half-capitalist nation, mixing a fairly free market with extensive government programs intended to reach politically guided goals. Oh yeah, with huge deficits and debt.

In my opinion the central flaw in the current energy program is that it pretends we can "grant" and "credit" our way to a solution.

I don't believe that is possible, and I'm afraid that many people view that as the only interpretation of "government support."

No, we have debt, we should use the tax and regulation side to penalize "bad" energy sources. In my terminology, "bad" energy sources are the dirty ones, or the massively imported ones.

As an easy example, move from "appliances should be Energy Star compliant" to "appliances must be Energy Star compliant."

Given economies of scale, moving Dell (etc.) to full Energy Star would have a null net cost. etc.

Re: What premise is

Re: What premise is that?

The premise of the resolution, which states:

"RESOLVED, the United States should substantially reduce its foreign dependence on oil through increased government support for the development of alternative automobile fuel technology."

The wording implies oil receives no such support.

A more accurate resolution would be:

"RESOLVED, the United States should substantially reduce its foreign dependence on oil by providing government support comparable to what it is presently expending on oil for the development of alternative automobile fuel technology."

Wheew, it kind of ended

Wheew, it kind of ended there? How was the debate? Did you all get over your snit fit yet?

Krusade on then!