One of the most abused economic ideas in American politics is the concept of "externalities." There are undeniable positive spillovers in education. When I learn to read I can get a better job. That benefits me. It also benefits my employer who gets a more skilled worker. And it benefits everyone else (assuming they all like liberty) because now I can read the Constitution and oppose the rise of a tyrannical government.
Thus a valid argument exists for partial financing of education through taxation. Unfortunately, our government has taken over the education process itself, making sure that children in public schools will never get exposed to God's Word or to the inconvenient writings of the Founders of the American Republic.
Another example of such social engineering is the mortgage interest deduction. The justification for that tax break is that as a property owner the deduction gives me a higher stake in increasing the prosperity and preserving the freedoms of my country. But this fine idea was abused for decades, resulting in a housing boom followed by an inevitable financial crash.
The externality argument also can be made in the case of vaccines. If I get a flu shot, I not only avoid an expensive sickness but also protect the health of others who would come in contact with me in the coming months. Thus we could argue for limited subsidies of medical research or some government intervention in dealing with the most dangerous epidemics. But the case for socialized medicine is far from proven.
One of President Obama's policy pillars is "energy independence." Leaving aside the fact that no one has ever made a convincing case for self-sufficiency in any sector of the economy, this administration's bias toward "green" technologies is highly questionable.
First of all, our tax code is already as porous as the Swiss cheese in my sandwich. It has been distorting market signals, reducing economic efficiency, and destroying jobs for decades. We don't need more loopholes; we need to close the existing ones. If the Chinese government wants to use its taxpayers' money to subsidize clean energy research, let them do it and let us later copy and free ride on their efforts for a change.
Second of all, research shows that we may have more fossil fuel reserves than all of the Middle East. So if gas prices keep increasing or if Venezuela's dictator stops selling us his oil, we can always increase domestic production or bring in more from Canada.
Last but not least, market competition and cost cutting are powerful enough motivations for unhindered private entrepreneurs to seek new resources and to improve energy efficiency. Without handouts and bailouts, businesses are more likely to serve our needs without producing a clean-tech bubble. Before you pay 50 bucks for Obama's "green" light bulb, look at our refrigerators-their average energy consumption fell by more than 50 percent between the oil crises of the 1970s and 1990, when the first federal efficiency standards for appliances went into effect.
If you want to do something good for the economy and the environment at the same time, fix those portions of the tax code that encourage consumption and discourage savings and long-term investments. But if you insist on using taxation as a tool for fixing externalities, please consider a tax deduction for guns. More armed homeowners equals less crime equals more money in the local and state budgets for other programs.