How dare you!
Uh oh!
Greta won’t be happy.
If you’re not familiar with Greta Thunberg, she’s the young Swedish environmental activist known for challenging world leaders to take immediate action for climate change mitigation.
Here’s what The Wall Street Journal tells us…
President Biden has done more to address climate change than any of his predecessors. So far, voters don’t seem to care.
Funny that, considering inflation is still running above 3%.
The national average gas price is – according to AAA – more than $3.60 a gallon. Or $5.37 for the poor suckers in California.
And Americans are worried about their government poking its nose into various foreign wars.
So, we can probably excuse the average Joe and Jane if they aren’t that worried about so-called climate change right now.
But it’s not just the general public… Investors couldn’t seem to care less either.
We’ll take a further look at this story today and give our take on where the “green economy” could be heading next.
Barley Motor Car? American Steam Truck? What The…?
The following chart illustrates the point. It shows the performance of two exchange-traded funds (ETFs) over the past five years:
Source: Yahoo Finance
The blue line is the iShares Global Clean Energy ETF (ICLN), and the red line is the KraneShares MSCI China Clean Technology ETF (KGRN).
They’re both down nearly 60% since the peak in 2021.
What does it show? Apart from the fact that investors and other folks don’t care enough about or believe that so-called climate change is a threat…
It proves that governments are lousy at controlling an economy.
It’s why, if so-called climate change is a threat, and if governments really wanted folks to do something about it – they should leave it to the free market.
Because left to the free market, electric-powered vehicles would likely already have a much larger market share… People would more likely have found alternative ways to power their homes, rather than having to use fossil fuels…
Businesses would have invested and innovated… not because of the prospect of getting government handouts, but because they could forecast revenue, costs, and profits.
Naturally, forecasting doesn’t guarantee success. But if you have enough businesses all doing the same or a similar thing, and competing for the same customers, they’re able to get a signal from the market about where prices should be.
And over time, you get winners and losers. You get expansion as more and more businesses get into the market.
Then you get overcrowding… Then you get bad decision-making and bad forecasting (that’s all part of the free market, folks)… And then you get consolidation.
Within that, there’s probably one or more boom-and-bust phases too.
But the outcome is the consumer gets what they want. And if surveys are anything to go by, people do want cleaner energy sources if they’re given a choice. It’s just that right now, they have other priorities.
By the way, that whole scenario we laid out above? We did some research several years ago to see how the U.S. auto industry developed at the beginning of the 20th century.
We were stunned by what we found.
As we recall, between the 1890s and 1940, there were something like 1,400 carmakers that came and went. Some barely lasted a couple of years. Others lasted longer.
By the time the world got through World War II, there were fewer than a dozen American carmakers. They either went out of business, or they merged with bigger companies.
Who remembers American Steam Truck Co.? Not many, we’d wager. It lasted from 1922–1924.
Or Barley Motor Car Co.? It lasted a few years longer, from 1916–1929.
Or Cartercar (1905–1916), Gray Light Car (1920), Lancamobile (1900–1901), Oakland Motor Car Co. (1907–1931), and Stoddard-Dayton (1904–1913).
Those are just a handful of the carmakers that came and went… and that pretty much no one remembers today.
The point is, by and large, it was the market and the consumer who decided which firms succeeded.
Was it a pure free market? Probably not. Wherever there’s government, there’s corruption. That’s a fact.
But the proof is plain to see in all walks of life that when the government gets out of the way, and the free market is allowed to get on with it, the outcomes are always better than anything the government can do.
For that reason, we’ll continue to stay clear of clean-energy-related businesses for as long as governments continues to meddle. And we suggest you follow that advice, too.
Regards,
Kris Sayce
Editor, Legacy Research Group