At EcoWatch, Megan Quinn Bachman advocates creating state-owned banks to fund “green electricity—and other sustainability projects.” Unfortunately, government-owned banks have a sad history of subsidizing ecologically-destructive boondoggles. Bachman points to one of the few examples of state banks that managed to turn a profit, the Bank of North Dakota. But its funds have gone to fossil-fuel projects, not green energy, and effectively subsidized some fossil-fuel projects through below-market rates.
As bank-regulation expert Mark Calabria notes in the New York Times, advocates of state banks “might point to the Bank of North Dakota, currently the only state-run and state-owned American bank. Of course that ignores that in the 1800s there were a number of state-owned U.S. banks. They all failed miserably, and at great expense to the taxpayer. They were also magnets for corruption. But that’s history. Currently the Bank of North Dakota is generally a well-run institution. It is also a massive subsidy to the fossil fuel industry. One need only look at its annual reports to see that the bulk of its below-market lending has been to the fossil fuel industry. It’s a case in point, illustrating that government-owned banks will tend to subsidize the powerful.”
Government ownership of other industries like agriculture also has had negative effects on the environment. A classic example is in Soviet Central Asia, where the vast Aral Sea largely disappeared, leaving behind a vast ecologically-ruined wasteland after a massive government cotton project ravaged the regional environment. As the London Daily Mail notes, “The shrunken sea has ruined the once-robust fishing economy and left fishing trawlers stranded in sandy wastelands, leaning over as if they dropped from the air. The sea’s evaporation has left layers of highly salted sand, which winds can carry as far away as Scandinavia and Japan, and which plague local people with health troubles.”
Cunning politicians use green rhetoric to push policies that actually harm the environment and the economy, the classic example being ethanol mandates (which recently enriched Wall Street speculators, some with ties to the Obama Administration). While in the Senate, Al Gore, working with fat-cat lobbyists, “saved the ethanol” industry by pushing through big taxpayer subsidies for ethanol. (Years later, he belatedly admitted that ethanol subsidies were a “mistake,” a harmful policy partly designed to appeal to “farmers in the State of Iowa,” which holds the influential Iowa caucuses that can make or break a Presidential campaign).
For cynical political reasons, the Obama Administration clings to ethanol mandates, backing them despite growing evidence that they increase world hunger and mortality, and harm the environment.
In 2008, a Washington Post editorial by two prominent environmentalists described how ethanol mandates have harmed the environment and spawned hunger across the world. In “Ethanol’s Failed Promise,” Lester Pearson and Jonathan Lewis observed that “Turning one-fourth of our corn into fuel is affecting global food prices. U.S. food prices are rising at twice the rate of inflation, hitting the pocketbooks of lower-income Americans and people living on fixed incomes. . .Deadly food riots have broken out in dozens of nations.” [click to continue…]