Monday, June 20, 2016
here about the coal industry falling victim to central "planning",
I was somewhat surprised and intrigued to see a well-written
piece arguing that, "Coal Isn't Dying Because There's a War on
It." The main points of Barry Ritholtz's argument (after he gives a
passing nod to over $300 billion in regulatory overhead) are that: (1)
cheap natural gas (for which we can thank fracking) is displacing coal
fair and square; (2) some of the companies facing bankruptcy now
acquired bad debt, exacerbated by the lower coal prices; and (3)
"clean energy" (as Ritholtz calls it) is replacing coal due to
state-level regulations against coal, or ... (as I would put it) there
is even more more central planning than just the previously mentioned
I appreciate Ritholtz pointing out (1) and (2), and have indeed made a similar point myself about getting facts straight when advocating matters of public policy:
[S]uch carelessness played right into the hands of someone who, after taking the moral high ground ceded to him, was apparently just as quick to blame this sad state of affairs on capitalism, through the convenient surrogate of the building's absentee landlord. ("[T]he free market capitalist is the bad guy here....", he claims in a comment at Marginal Revolution.)That said, I take issue with Ritholtz's last argument, because, whatever the proper solution to pollution may be (e.g., torts, or better definition or enforcement of property rights), I don't agree that the state artificially dictating our source of energy is the proper one. Furthermore, not assigning this part of the problem for the coal industry to regulatory costs or central planning is simply wrong.
So, while I agree with Ritholtz that the sudden and dramatic decline of the coal industry is no one-dimensional problem, I find that his analysis actually supports the idea that, were it not for a regulatory burden amounting to a "war on coal", the industry would, at a minimum, not be as troubled as it is.