Cato’s Ikenson Responds to Liveris on Energy

By October 2, 2007Energy, Global Warming

Dan Ikenson of the Cato Institute, whom we appreciate as a persuasive advocate of free trade and U.S. manufacturing, responds today in the National Review Online to Andrew Liveris’ column on energy policy. (We linked to Liveris’ column here.) We’re sensitive to Ikenson’s criticisms of rent-seeking, but it sure seems like he’s engaged in a straw-man argument. Ikenson:

But Liveris rests his case for some grand national energy policy on the fallacy of U.S. manufacturing decline. Expanding U.S. energy supplies is probably a worthy objective, and regulatory impediments to that process should be reviewed, and in some cases reversed. But companies that rely heavily on energy, like Dow Chemical, should consider investing in technologies and infrastructure to develop new energy supplies rather than ask government to do it for them. If it’s as worth pursuing as Liveris claims, it will be done in the private sector without further inducement.

Decline is a relative term. Doesn’t the relocation of the chemical industry overseas due to high energy costs and the impact of more expensive chemicals on the supply chair represent some form of decline? And couldn’t we be doing much better if our current national policy didn’t increase energy costs by limiting supply? See this study for an accounting of these serious problems: ““The Hidden Backbone of U.S. Manufacturing: Weakening Under Chemical Cost and Supply Pressures.”

Ikenson: “Expanding U.S. energy supplies is probably a worthy objective, and regulatory impediments to that process should be reviewed, and in some cases reversed.” Yes, indeed. And you’ll see that any NAM discussion of a national energy policy starts with the need to increase access to domestic energy supplies. Ikenson concedes the point.

Ikenson: “But companies that rely heavily on energy, like Dow Chemical, should consider investing in technologies and infrastructure to develop new energy supplies rather than ask government to do it for them.” THEY DO! From Dow:

“As a world leader in chemistry, we are uniquely positioned to continue to provide innovations that lead to energy alternatives, less carbon intensive raw materials sources, and other solutions not yet imagined”, says Rich Wells, vice president Energy. “In fact, our science and technology has been contributing solutions to the global climate change and energy challenges since 1990. Our science for instance has led to the development of alternative energy sources such as biofuels, photovoltaics and wind, and various product solutions for the building and automotive industry. And we’re a leader when it comes to energy efficiency and conservation, an expertise that we will plan to leverage more actively to other sectors, countries and the general public.”

Manufacturers lead the way in energy efficiency and conservation, BECAUSE of market forces. Saving money through efficiency lowers costs.

We give this exchange to Liveris. But whatever the misperceptions, it’s nice to see the arguments being carried out on this policy terrain. Far better for the debate to focus on how much more the free-market and domestic energy supplies should enter into national energy policy than to argue over how much we can raise taxes, add regulations and cramp the economy.

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