Stranger than fiction: The Italian mafia hearts green energy

posted at 8:51 pm on January 23, 2013 by Erika Johnsen

The United States might not have a strong organized-crime culture comparable to Italy’s (that I know of…?), but it most certainly does have a robustly organized rent-seeking culture which, in terms of opportunities foregone, has plenty of the same detrimental net economic effects. The Washington Post just reported on a story that all too clearly demonstrates why it’s a terrible idea for national governments to be so heavily invested in picking marketplace winners and losers, in green energy as with everything else:

In an unfolding plot that is part “The Sopranos,” part “An Inconvenient Truth,” authorities swept across Sicily last month in the latest wave of sting operations revealing years of deep infiltration into the renewable energy sector by Italy’s rapidly modernizing crime families.

The still-emerging links of the mafia to the once-booming wind and solar sector here are raising fresh questions about the use of government subsidies to fuel a shift toward cleaner energies, with critics claiming huge state incentives created excessive profits for companies and a market bubble ripe for fraud. China-based Suntech, the world’s largest solar panel maker, last month said it would need to restate more than two years of financial results because of allegedly fake capital put up to finance new plants in Italy. The discoveries here also follow so-called “eco-corruption” cases in Spain, where a number of companies stand accused of illegally tapping state aid.

Because it receives more sun and wind than any other part of Italy, Sicily became one of Europe’s most obvious hotbeds for renewable energies over the past decade. As the Italian government began offering billions of euros annually in subsidies for wind and solar development, the potential profitability of such projects also soared — a fact that did not go unnoticed by Sicily’s infamous crime families.

Roughly a third of the island’s 30 wind farms — along with several solar power plants — have been seized by authorities.

The trouble is, as Conn Carroll points out, this situation is hardly new or even unique. When you set up wildly generous and bureaucratized subsidy systems that incentivize people to compete for profits in the political arena rather than the free market, you are setting yourself up for all kinds of corruption, fraud, and unintended consequences. I’m with Veronique de Rugy at NRO — you can’t make this stuff up.

Obviously, the mafia’s investment in the green-energy industry is very specific to Italy. But there’s at least one thing similar in this story to our experience in the U.S. When the government subsidizes an industry, it artificially boosts its profit potential and attracts investors that may not have consider investing before the subsidy was in place, often because the projects were deemed not viable or not profitable. The subsidies also tend to keep alive industries that may otherwise not survive because they aren’t profitable on their own. Moreover, the subsidies often go to industries or specific companies that would do very well without the subsidies but happen to be well-connected with the powers-that-be.

And I’m not even picking on green energy here — I’m picking on metastasized governments that use their political goals, no matter how ostensibly noble, as an excuse to provide ample opportunities for special interests to flout the free market and court political favors. …Looking at you, Obama administration.


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Why surprise? The Mafia knows a good money-stealing fraud when they see one.

rayra on January 23, 2013 at 8:54 PM

In an unfolding plot that is part “The Sopranos,” part “An Inconvenient Truth,” authorities swept across Sicily last month in the latest wave of sting operations revealing years of deep infiltration into the renewable energy sector by Italy’s rapidly modernizing crime families.

Nice windmill ya got there…

I’d hate to see anything happen to it…

Tim_CA on January 23, 2013 at 8:56 PM

Enterprising Fellas.

The Italian Mafia also likes minimal government interference and least amount of regulation possible.

What a twist!

lester on January 23, 2013 at 8:59 PM

The United States might not have a strong organized-crime culture comparable to Italy’s

Sure we do, it’s called the Federal Government.

Have you been in a coma your entire life until now?

Bishop on January 23, 2013 at 9:00 PM

Doesn’t surprise me since the whole Green Weenie Religion is a giant money laundering scam to delude the pagan drones…

Al Gorejareeza has more money than Romney…

What Difference Does It make!!

workingclass artist on January 23, 2013 at 9:03 PM

The United States might not have a strong organized-crime culture comparable to Italy’s

Sure we do, it’s called the Federal Government.

Have you been in a coma your entire life until now?

Bishop on January 23, 2013 at 9:00 PM

SCORE!

workingclass artist on January 23, 2013 at 9:04 PM

The United States might not have a strong organized-crime culture comparable to Italy’s (that I know of…?),

…pssssst! They call them Democrats here!

KOOLAID2 on January 23, 2013 at 9:05 PM

Wait, democrat government in cahoots with “private sector” Italians?

Fascista!

tom daschle concerned on January 23, 2013 at 9:06 PM

Corruption breeds corruption, bad process breeds bad process, scams breed scams.

Paul-Cincy on January 23, 2013 at 9:06 PM

Makes sense to me. No surprise.

Bmore on January 23, 2013 at 9:09 PM

I dunno. Could the Mafia have done a better job of looting Solyndra?

trigon on January 23, 2013 at 9:11 PM

I dunno. Could the Mafia have done a better job of looting Solyndra?

trigon on January 23, 2013 at 9:11 PM

Oh yes.

Obama and the Dems would have given them stimulus money…[Obama dollars for low info voters]

Electrongod on January 23, 2013 at 9:14 PM

You better buy these carbon credits or else you’ll be sleeping with the fishes.

SoulGlo on January 23, 2013 at 9:14 PM

Not strange, Reagan’s duck joke comes to mind.

Speakup on January 23, 2013 at 9:25 PM

I still prefer a Russian SKS or AK fitted with a 30 round clip. Bigger cal bullet and better I think for close quarters.

HondaV65 on January 23, 2013 at 9:17 PM

Err..I’m thinking the SKS are actually Chinese…

BigWyo on January 23, 2013 at 9:32 PM

The sks was a Russian design that was superceded by the AK before production of the sks really took off. the Chinese liked the sks and made millions. I have a Yugo sks with a modern stock that accepts 40 rd mags. with a little work you can make the trigger really nice. there is a company that makes great after market iron sights that increases the sight radius and pushes accuracy out another hundred yards or so.

tom daschle concerned on January 23, 2013 at 9:39 PM

http://en.wikipedia.org/wiki/Simon-Ehrlich_wager

Of course, he’s a liberal. Just because he was decisively proven wrong on the very premise on which he based all of his theses is no reason to stop celebrating him with a pulpit.

HitNRun on January 23, 2013 at 10:02 PM

Eco-fraud in Sicily was first reported two years ago. This is nothing new.

al-gore made his money the *right* way, according to the Democrat Media complex, so no worries there. But Romney, car elevators! expensive horses! rich!!!11!

Wanderlust on January 23, 2013 at 11:00 PM

Stranger than fiction: The Italian mafia hearts green energy

By sheer coincidence, so does the American Mafia.

The United States might not have a strong organized-crime culture comparable to Italy’s (that I know of…?)…

They’re in the White House, Erika. They control the Senate and, in all honesty, the House of Representatives as well. Where you been?

ROCnPhilly on January 24, 2013 at 6:51 AM