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selective taxation, and cap-and-trade proposals. Some of
these policies, like government loan guarantees to “green”
firms, provide clear examples of cronyism. Other policies,
like environmental regulation, grant privileges to specific
firms in a more subtle way. Although these policies
are diverse in their approaches, they all share the common
characteristic of putting government representatives
in a position to choose the economic winners and
losers. Modern environmental policy therefore resembles
industrial policy in the sense that the government selects
which firms should be favored under the law and which
firms should be targeted for taxes and regulatory penalties.
While environmental policies may begin with good
intentions, recent experience in the United States with
environmental interventions has shown that when placed
in a position to distribute benefits to friends, associates,
and political allies, government employees often succumb
to this temptation.
The recent loan guarantee program from the
Department of Energy (DOE) provides a clear-cut example
of government cronyism in environmental policy.
George W. Bush signed the program into law through
the Energy Policy Act of 2005 and Barack Obama implemented
the program and promoted it to the public as a
necessary investment in America’s green economy. The
program’s proponents argued that innovative ideas in
alternative energy sources have a hard time attracting
investor funds due to the high risk involved in these initiatives.
4 Advocates concluded that the government must
step in to provide economic security for the necessary
funds to enable the development of these critical technologies.
A public loan guarantee, in which the government
ENVIRONMENTALISM 67