[benpope]

Originally Posted by Xringer

Right now, both the buyer and the seller knows there is 'free' taxpayer
money that's going to be transferred from the taxpayers/gov to the sellers/installers.

The money transfer is not greatly benefiting the buyer, since his tax break
or rebate is most likely already built into the installed price.


So, imagine a product without the 'redistribution' of taxpayers dollars.

You want to buy some pecans, so you look for the best quality
at a price you can afford. You go to the market and pick what
you want, and buy it. Very simple.

No money was stolen from other people.. Seems like a nice idea eh?

It is a nice idea, because those the young folks down the road,
cooking those Big Macs, don't have to help pay for my pecans.
Why should they?


The government is saying to 'rich' people, If you install Solar,
we will take other taxpayer's money and help you pay for those panels..

Some of those other taxpayers live in apartments and can't buy solar..
And maybe can't even afford to buy their kids good shoes.
Is giving their tax dollars away, fair to them?


It's like a pyramid scam. If you buy in early on, you win!
Everyone else pays for you.
But, if everyone jumps on it, it has to be canceled.
I think you know why..

Well, yes and no. First, I doubt installers and PV manufacturers are going to change their prices much based on subsidies. While in the short term prices could go up due to induced scarcity because more people are buying them, in the long term prices will drop as production rises due to more manufacturers entering the market. Supply rises to meet the new "artificial" demand induced by the subsidies and prices stabilize at a lower level than before. Keep in mind that as long as there is no monopoly or price collusion, markets continue to work even when they aren't "pure".

Unfortunately I can't find a better graph, but this one shows installed price per watt excluding subsidies 2008 to 2009in California . That small increase roughly correlates with the stimulus, but you see a general decline in prices after that. Incentives induce more people to buy which induces more production and more installers rushing into the market. Overall, prices go down, but like you say there is a cost.

The cost for the solar installations are borne by all taxpayers in the form of higher taxes now, inflation, higher taxes later, or some combination of the three. You are right that the subsidies are going to go to the wealthy, but the wealthy are also the heaviest users of energy per capita. They get some of the benefits--prestige and social credit for "going green"--but the real benefits--cleaner air and a less rapidly warming planet--are shared by everyone, not just US taxpayers.

Free markets are good at doing what is most efficient (when economists say efficient, they mean the easiest way, the path of lowest resistance), but they are not so good at doing what is best for the group as a whole. What the individual thinks is best for them is not always what is best for them and is rarely what is best for everyone. One famous example is a thought experiment called the Tragedy of the commons--basically everyone acts in their own best interest, but that depletes or destroys a common resource. To use your pecan/Big Mac example, we might want to subsidize pecans to encourage people to eat them instead of Big Macs. We would all benefit--former Big Mac eaters individually in the form of better health and all people in the form of lower health care costs.

Solar subsidies are a sort of pyramid scam when they aren't sufficiently funded. But, take a look at this infographic from 1BOG that looks at applying the same level of subsidies to solar as we do to fossil fuels. I am a bit dubious of their numbers, but they are probably mostly right. If we funded it sufficiently, subsidies would make solar power cheaper than coal across the US.

The amount of money that is being "redistributed" from the rich to the poor for solar subsidies is, in the grand scheme, minuscule and the entire world benefits from it. The real redistribution now is going from the young to the old--social security and medicare--so don't kvetch too much about redistribution .