In his Christian Science Monitor article Laurent Belsie curtly summarizes the state of the solar panel industry:
Chinese-owned competitors are flooding the global market with cheap, subsidized products. Manufacturers in the United States, which invented the technology, are so battered by imports that they’re on their last legs.
and then goes on to touch on the factors that might be taken into consideration in the federal government’s response to the situation including:
- free trade
- maximizing the number of U. S. jobs
- maximizing the number of solar panels installed
- the course of future technological development in solar energy
So, what’s the right policy?
I know what I would do. I’d impose a Pigouvian tax to offset the price effects of China’s subsidies, its labor laws, its failure to enforce its own environmental protection laws, and the benefits it’s derived from raiding U. S. technology. I’d also end subsidies to the domestic solar industry. Then I’d let whatever happens happen.
However, that reflects my values and objectives. It’s certainly not a minarchist solution. Countering the mercantilist actions of the Chinese government requires action by the U. S. government.
What’s the right policy?
I’m not so sure I’d ascribe such a literal interpretation to libertarian positions. It’s not that far from protection from military aggression to protection from commercial aggression.
In any event, that proposed solution is what most practical minded persons would advocate. I remind people, though, of the howls of “inciting a trade war” recently leveled against Trump by Democrats and never-Trumpers alike.
Finally, having been pitched solar deals for a good 10+ years now (and then rescue money deals in restructurings) I can tell you there is a lot going on besides just Chinese mercantilism. When it comes to dropping subsidies be careful, as they say, of what you wish for.