European Theater of the Absurd

It’s not the Moon that Makes People Mad – it is the Sun

by Pater Tenebrarum

Last week, Mish wrote about the recent plan of Spain's government (a 'conservative' government, no less) to actually tax sunlight. At first we though there must be an error. Could it really be that what Bastiat thought to be so utterly absurd he used it in his famous 'Petition of the Candlemakers' to satirize the errors of protectionists and mercantilists has now become reality in  a truly bizarre example of life imitates art? Is it possible that the Spaniards are so devoid of humor they don't recognize that the ridicule coefficient of this idea is truly off the scale?

One must keep in mind though that this is Europe and Spain is part of the EU. There isn't anything the ruling castes will not think about taxing. Breathing is probably next in line; after all, we humans exhale that 'dangerous poison gasCO₂'. What better way to reduce our 'carbon footprint' than charge us for breathing, which is evidently endangering the planet?

However, in Spain's case the reasons for the proposed new tax are more crassly commercial, since solar panels are obviously widely approved as planet-saving devices. No, it is simply about subsidizing the existing providers of electricity by making solar energy more uneconomic. After solar energy has finally become remotely viable, the EU is doing whatever it can to make it non-viable again. These are the same impertinent bureaucrats who have made the light bulb illegal citing 'climate change'. In reality that was of course just a flimsy pretext as well. They were lobbied (read: probably bribed) by industry, which now is making a mint from selling people lighting devices that seemingly come straight from the morgue. Not only that, since the 'energy savings lamps' contain plenty of mercury, they actually really are poisonous. If one of them breaks in a classroom, the whole school must be evacuated.

Speaking of solar panels and the EU's race to once again render them economically non-viable, the dispute with China over its alleged 'solar dumping' is going into its final round. A number of hair-raising mercantilistic idiocies have now apparently been agreed on.

Raise Your Prices, or Else

Imagine a mob armed with pitchforks and torches storming Wal-Mart and demanding that it immediately raise its 'everyday low prices', else people would really get mad at it.

That would be the functional equivalent of the spectacle the EU's bureaucrats are providing us with in their 'fight against solar dumping' from China. Instead of being glad that the EU's consumers can finally buy solar panels at prices that actually make economic sense – which has incidentally led to the flourishing of a large and growing industry that distributes and installs these panels and employs far more people than the EU's solar panel manufacturers -  the EU bureaucracy has decided that the tiny minority of manufacturers must be protected from the evil Chinese and their low prices, consumers and distributors/installers be damned. The climate, which is otherwise constantly used as a pretext for new regulations and taxes be damned as well!

As Reuters reported last week:

“Beijing's envoys have agreed central elements of a deal with the European Union that may yet avert punitive duties on Chinese solar panels that the bloc plans to impose next month, Chinese and European sources said on Wednesday.

The conflict, the biggest trade dispute between the European Union and China, has prompted Beijing to threaten duties on European wine exports and risks sparking a trade war or creating barriers to EU companies trying to expand in China.

The European Commission, the EU's executive, says China is flooding Europe with tens of billions of euros of cheap panels sold at below the cost of production, and has imposed low tariffs that will jump on August 6 if a deal is not reached.

After six weeks of talks, negotiators are close to agreeing a minimum price at which Chinese solar panels must be sold in the 28-nation bloc, and an annual quota for Chinese imports.

"Chinese negotiators went back to Beijing on Monday evening and when they left Brussels, only a few numbers had not yet been settled," said a Chinese source, who is close to the talks and declined to be identified. Negotiators are not expected to return to Brussels and final discussions are being carried by telephone at the highest political level, mostly between EU Trade Commissioner Karel De Gucht and Chinese Commerce Minister Gao Hucheng.

European negotiators have told their Chinese counterparts that Brussels needed two weeks prior to August 6 to implement any deal, meaning July 23 was the last day to agree a deal to avoid tariffs of 47.6 percent kicking into effect. However, EU diplomats said there was time to avoid the damaging impact of tariffs on China's 21 billion euros ($28 billion) of solar sales to Europe because Chinese producers could freeze imports for a brief period until the deal was done.

"We are very close. Both sides want a deal," said one European source. "Even if an agreement is not in place on August 6, Chinese producers could choose to hold back their imports until there is agreement because we are so close." The Commission declined to comment on the details but John Clancy, the EU's trade spokesman, said: "Discussions are ongoing at the highest level, as both sides seek an amicable solution." The Chinese mission to the EU declined to comment.

European solar panel manufacturers allege China is trying to run them out of business in the European Union, the world's largest solar market.

Chinese solar panel production quadrupled between 2009 and 2011 to more than the entire global demand. EU producers say Chinese companies have captured more than 80 percent of the European market from almost zero a few years ago.

But Britain and Germany are worried about angering China with tariffs on manufacturers such as Trina Solar, Yingli Green Energy and Suntech Power Holdings, damaging ties with the EU's second-largest trading partner.

As higher duties would effectively lock Chinese producers out of the EU market, there are also fears that the European installers who buy their products may go out of business.

Sources on both sides say Brussels and Beijing are converging on a minimum price for Chinese photovoltaic modules in Europe of 0.55 euros per watt of capacity, which is near the average price for Chinese modules since November last year, according to solar price index pvXchange. The average price of German solar panels on the international spot market was 0.77 euros per watt in June.

European solar panel industry association EU ProSun say that setting the minimum price at the current price is unacceptable and that they will go to the European Court of Justice if the deal goes through at that level.

"The European solar manufacturing industry would be wiped out," said EU ProSun's president, Milan Nitzschke.

However, China has sold at prices as low as 0.38 euros a watt, according to the European Commission, and the 0.55 euro level would mean Chinese prices, which have been falling on an almost monthly basis since January 2010, could not go lower.

The Commission has also proposed allowing China to meet 60 percent of EU consumption, down from 80 percent today. That is still an open issue, sources told Reuters, as is the duration of the deal, but these are lesser issues than the price.”

(emphasis added)

Shouldn't everybody rejoice that Chinese prices have declined to a mere 0.38 euros a watt? What can possibly be gained by raising these prices to 0,55 euros, which the EU's panel manufacturers incidentally still maintain is 'too low'? As an aside, if they cannot survive these low prices, why are they still in business? And what, pray tell,  happened to 'saving the planet'?

Where does the idea come from that consumers owe the EU's evidently not very productive panel manufacturers a living? If the EU wants to lower the costs of EU panel manufacturers, then all it needs to do is introduce radical economic reform: institute a free market for labor and lower taxes. It's as simple as that.

What makes the whole thing even more idiotic than it already is, is the fact that in Germany alone, an estimated 80,000 jobs are at risk at companies distributing and installing solar panels from China! The stupidity and impertinence of these bureaucrats simply knows no bounds. EU politicians constantly fret about wanting to 'save the European project'. If only it were something worth saving. Not a day passes without fresh impositions being decreed that further curtail the free market and the choices of consumers and entrepreneurs.

Conclusion:

Civilization and progress could be immeasurably improved if someone were to place Brussels underneath an impenetrable cheese dome.