Market Institute President Charles Sauer has a new article out in the Washington Examiner looking at the $6 billion in nuclear power subsidies found in the recently passed infrastructure bill.

He writes:

“When governments intervene in markets, strange things start happening.

It’s as if the government creates and inserts a variant from a different universe into the market. Regulations can raise the cost of market entry, restrict prices, and harm supply. The end result is that businesses aren’t allowed to function as effectively as they would in a normal market. This can break the market and lead toward businesses eventually needing bailouts.

Take the infrastructure bill that passed the Senate on Tuesday. It includes a $6 billion subsidy for the Department of Energy to spend on nuclear facilities.

Nuclear power plants are expensive to build. They entail regulation after regulation. If that wasn’t enough, after the power companies that have gotten past the regulators, they are often held up by protesters. After they are built, however, nuclear power plants nearly make money out of thin air. In fact, the power source that these plants use is harder to turn off than to turn on! That isn’t to say that other costs don’t exist (for instance, dealing with nuclear waste isn’t cheap). But without government interventions, nuclear power would still be profitable.

But hold that thought. Because the nuclear power companies now say that their industry isn’t profitable enough! They’ve seen to it that the government subsidizes nuclear power plants.

The problem is that subsidies are like a gateway drug. Once the government money starts flowing, entrepreneurs inevitably want more. Entrepreneurs understand that they no longer need to run a profitable company once government subsidies start, so they just spend enough money lobbying public officials. The government will then swoop in and hand them the profit that they were missing.

This is cronyism at its finest. Government creates the monster, and then, the monster gets greedy. You can’t even really blame the monster.

Consider, for example, one of the nuclear companies that Congress is considering a subsidy for: FirstEnergy. It recently announced a settlement agreement to pay a $230 million penalty for bribing Ohio officials to ensure the passage of a ratepayer-funded bailout. In 2020, Exelon ComEd agreed to enter a deferred prosecution agreement and pay a $200 million fine based on a bribery scheme in Illinois.

The question should be asked: Why is the government bailing out the nuclear industry? The Heritage Foundation’s Katie Tubb notes, “Another concern is where the bill may lead. It’s not hard to see how the program could establish the underlying legislative justification for a fundamental reorganization of electricity markets around certain environmental objectives, rather than issues such as reliability, costs and benefits, and customer preferences. Why else subsidize nuclear reactors for not emitting pollutants that the EPA already regulates under the Clean Air Act?”

While Tubb’s forecast is hard to disagree with, the politicians also have a point because nuclear energy is cleaner than most other sources. But as Tubb points out in her article, there are already regulations in place that attempt to control the pollutants from some of the other energy producers. So, there must be something even bigger at play.

That is cronyism. Cronyism is the monster that can’t easily be stopped.”

To read the rest of the article head over to the Washington Examiner by clicking here.

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