Prices that emerge in markets are signals wrapped up in an incentive. We can thank the economist Alex Tabarrok for stating this very old truth in a single, pithy sentence.
Thanks for the econ lesson, you say, but so what? The once-in-a-century cold snap that caused Texans grief last week is a great example of so what. Estimates of the damage caused by the power outages in Texas are in the billions of dollars.
Without price-distorting subsidies from politicians, all those wind turbines in Texas wouldn't have been built. And all those freezing Texans wouldn't have been freezing. And the billions in damages could have been avoided.
Hind sight, you say? Not really. It's an old story that's well known by economists. Benefits concentrated on a tiny subsidized few, with costs spread widely over a huge tax-paying majority. How hard will you work to keep someone from stealing ten cents a day from you? How hard will you work to keep a subsidy worth $1,000 a day coming your way?
Why did politicians subsidize the wind turbine industry to the point that as much as 30 to 40 percent of the Texas electricity grid is supplied by wind turbines on some days? Because politicians respond to popular sentiment; it's part of what keeps them in office. And because politicians also respond to money, which is another part of what keeps them in office.
Politicians are not dummies, regardless of what it looks like. They know which parade to jump in front of to stay in office. That parade goes by the name, "climate change." Politicians know they won't be blamed 100 years from now; everybody knows that we have to get rid of fossil fuels, right? Why not give the folks what they are clamoring for, and make some cash to boot?
K-street in DC spent a lot of money to get those subsidy dollars flowing. The beneficiaries of the subsidies made sure of that; dollars well spent. Politicians have nothing to worry about. People will forget about power outages in Texas by next week. Move along; nothing to see here.
