Three Mile Island and the Free Markets | News, Sports, Jobs

In a political environment that increasingly claims that government-imposed solutions are the best answers to everyday problems, it sometimes seems like a rare moment when we can celebrate the dynamism of the problem-solving marketplace.

Three Mile Island — specifically, the new 20-year deal between Constellation and Microsoft to start up the decades-old reactor and provide the grid with urgently needed baseload power — is one such moment. This deal represents a genuine market-based solution to a broader economic challenge: satisfying our unquenchable thirst for electricity.

Too many MPs are proposing government intervention to meet this need. The proposals traditionally use the carrot-or-stick approach: politicians give tax breaks and subsidies (the carrot) to attract businesses they like and penalize those they don’t with increased taxes and regulations (the stick).

This is how our state ends up pushing authoritarian and arbitrary policy schemes like the Regional Greenhouse Gas Initiative (RGGI), the Pennsylvania Climate Emissions Reduction Act (PACER), and the Reliable Energy Sustainability Standard of Pennsylvania (PRESS) – all this burdening the industry and stimulating less productive sectors.

Such misguided measures are, at best, a treatment. These proposals offer superficial solutions to complex problems.

At worst, government intervention wreaks economic havoc. When the federal government injected billions in taxpayer funds to stimulate the pandemic-ravaged economy, record inflation was the unfortunate but predictable result.

Government subsidies distort the market. Subsidies lead to unnaturally increased investment in low-return economic activities such as intermittent energy sources such as solar and wind.

And these subsidy-dependent sources pale in comparison to nuclear power. Nuclear provides baseload electricity – round-the-clock, easy-to-ship electricity that feeds the grid when weather-dependent wind and solar can’t.

Even with massive subsidies and regulatory advantages, solar and wind remain economically unfeasible on a larger scale. The solar industry has recently seen a series of bankruptcies. Unless taxpayers foot the bill, government-subsidized energy companies—from Solyndra to Titan Solar—don’t have the comparative advantage to compete. Government underwriting props up inherently flawed businesses that can disappear as quickly as they appear—all at the expense of hardworking taxpayers.

Markets thrive on competition, not coercion. If the government removes or artificially restricts competition, the market will not produce the most efficient outcome. When it manipulates and intervenes, the government picks winners and losers, and the rewards become layered. A few benefit disproportionately and shortchange the rest.

Most government intervention schemes lack the price system – the naturally defined organic method of production, distribution and consumption of goods and services. The demand for electricity has steadily increased while the available supply has decreased, resulting in higher prices. These higher prices send an urgent signal to the world about the need for more electricity, and fast.

This price signal does not require a government mandate. Instead, this organic incentive encourages the profit motive within the marketplace. Although it sounds selfish and selfish, the profit motive invites companies to capitalize and invest.

Three Mile Island is an illustrative case study.

Five years ago, Exelon, the company that managed Three Mile Island, faced a significant economic crisis and lobbied for a $500 million bailout. Fortunately, Pennsylvania lawmakers did the right thing and balked at this massive subsidy, leading to the inevitable closing of the plant.

Now, the plant is on the verge of something much more impactful. Instead of extracting millions in public funds through annual grants, the Constellation-Microsoft project at Three Mile Island will generate about $3 billion in state and federal tax revenue. When Exelon closed, the community lost about 600 good-paying jobs. Now, projections suggest that revitalizing Three Mile Island will require 3,400 direct and indirect jobs to rebuild, operate and maintain the facility.

What once might have been a drain on public funds will now contribute more than it takes out while producing much-needed reliable electricity.

What is happening at Three Mile Island is not an isolated example. Instead, this cutting-edge event represents the countless smaller economic interactions that take place every day in the free market: companies and individuals who take financial risks, voluntarily enter into mutually beneficial contracts, and create businesses that create good-paying jobs. and provide essential goods and services.

Sound economics guides good public policy. This happens when we minimize unnecessary government intervention and allow free markets to do what they do best.

Stephen Bloom, a former state representative, is vice president of the Commonwealth Foundation, Pennsylvania’s free-market think tank.