Among the biggest whoppers President Obama told us last night during his State of the Union address was this: “To create more of these clean energy jobs, we need more production, more efficiency, more incentives. That means building a new generation of safe, clean nuclear power plants in this country.”
Under current law, it is literally impossible to build a safe, clean nuclear power plant. My 1984 paper explains why. The text is available here. In short, there would be no nuclear power plants operating in the United States without government subsidies. The Price-Anderson Act places a cap on damages that a nuclear power plant operator will incur should the plant have an accident. In other words, for over 50 years the government has introduced the same type of systemic risk that we have seen in financial industry. The industry gets the rewards, the government says, and taxpayers absorb the risks.
The insurance industry is a necessary mechanism in a free-market to help prevent excessive risky behavior. We ask a 16-year-old to drive safely, but we require him to hold insurance. Asking the financial services industry to not make risky bets or asking the nuclear power industry to build a safe plant is useless if we continue to prevent both industries from suffering the consequences of their actions.
Now, I suppose that President Obama would tell me that we need nuclear power and that the government can be trusted to place appropriate safeguards on the industry. That’s like saying the 16-year-old doesn’t need to hold insurance, but the government will monitor his driving habits.
Did the government direct Steve Jobs to produce his new iPad? Has the government directed the extraordinary innovation that has been centered in Silicon Valley and is transforming the world? There is nothing inherently different about energy. Free-market entrepreneurs innovate; governments waste resources by directing them into industries and firms that could not survive without subsidization. Think about ethanol.
Nuclear power is neither a liberal or conservative issue; it is a human rights issue. It is a human rights issue because under current law, it is coercive technology. It places in harms way Americans who have not voluntarily chosen to absorb the risks. Just as in the financial service industry, where Federal Reserve policy made a financial meltdown inevitable, increased subsidization of nuclear power may make a disastrous accident inevitable.