Tuesday, April 04, 2006

Uncle Sam's Profiters

The editorial board of the McAllen Texas Monitor takes a stand against the so-called "eco-capitalists."

They are being hailed in some circles as "capitalists with a conscience" — as bold, visionary, see-beyond-the-horizon risk-takers, helping to finance a clean energy revolution that will wean the country from fossil fuel dependency.

But most of the those who are pumping money into the alternative energy sector — and investing heavily in ethanol, wind and solar power — are just shrewd people, who understand that it’s hard to go wrong when Uncle Sam is helping hedge your bets and guarantee a return on investment.

We’ve seen a spate of news stories breathlessly reporting the sudden craze for "green" investing. "Wall Street wakes up to find ethanol shedding Midwest roots and gaining hold as alternative fuel," was how The Baltimore Sun headlined one.

"Microsoft Chairman Bill Gates recently invested millions in it," the story began. "Morgan Stanley is a huge player. And scores of venture capitalists are starting to take a look as well. We’re talking corn, not cyberspace."

We’re not impressed. Ethanol manufacturers and wind and solar power providers are among the safest investments in the world right now, given the lengths government is going to to prop them up, and forcibly carve out a market niche for them, through mandates, subsidies and regulatory actions.

"The alternative fuels gold rush is being driven by continued instability in the Mideast, rising gas prices and a presidential appeal to reduce the nation’s addiction to oil," reports the Sun. Only later does the story acknowledge that "the (ethanol) industry’s growth trajectory is all but written into the Energy Policy Act of 2005, which requires the U.S. to use 7.5 billion gallons of renewable fuels annually by 2012, or nearly double the amount of ethanol produced today." No wonder investors are putting their money behind what the story calls a "sure thing."

Real eco-capitalists exist. But no one should trumpet the wave of investing in ethanol production facilities, wind companies and makers of solar panels as a breakthrough. These investors aren’t being bold, but are playing it safe, understanding that Uncle Sam is standing ready to virtually ensure their return on investment. So please, let’s not make these investors into heroes.
Because they are not. "Eco-capitalists" is a misnomer--"eco-looters" and "pull-profiteers" would be a better description of this new incarnation of a very old idea.

No comments: