I feel I have to highlight one of the rare moments when the unseen consequences of governmental manipulation of markets becomes seen:

ENVIRONMENT Minister Peter Garrett will keep his job but thousands of workers will be sacked after the abrupt scrapping of the disastrous $2.5 billion household insulation scheme yesterday.

And Mr Garrett's own department admitted that as many as 80,000 homes across the country may have been left with insulation that does not comply with the official guidelines. Source

We know that when the government distorts the price system through, for example, incentives such as insulation subsidies or grants, the higher prices - which indicate to people where the most urgent shortages as dictated by true consumer preferences currently are - lure entrepreneurs and workers like moths to a flame into that industry. When the program ends, these people are suddenly not needed - they were employed in an area not aligned with consumer preferences. We will have thousands of unemployed insulation installers who might have become plumbers or gardeners or something else actually aligned with the true demands of consumers.

The failure of this program comes as no surprise to anyone who has read Bastiat's What Is Seen and What Is Unseen but 90 per cent of the time the majority of the voting population never look beyond what is seen. It's unfortunate that it took the loss of human life to expose it this time (another unfortunate consequence these programs have a habit of causing) - no doubt the government will be calling for more money, better people and better regulation to 'get it right' the next time.

If you give people money to do something, of course their going to do it. From the ABC:

The Federal Government says strong uptake of its solar hot water rebate is proof that its economic stimulus package is working.

More than 6,000 Australians have applied for the $1,600 rebate since it was introduced last month.

The Environment Minister Peter Garrett says it is good news for jobs and small businesses.

"This marks a really, really positive day for Australian industry, for the solar hot water industry, for the retailers, for the installers, for the plumbers, for the tradies, this is going to drive economic activity through the sector," he said.

"It 's environmentally friendly, it stimulates the economy and it's stimulating local jobs and local manufacturing. That's the critical thing.

"So we have positive proof that the Government's decision in the economic stimulus package to provide a non-means tested rebate for solar hot water systems is paying us immediate dividends."

Absolutely. Everyone who has applied for or installed a solar panel is benefiting immensely, along with the solar industry and all of their employees. But this was not the way to go about doing it. Mr. Garrett is missing the bigger picture: who did you steal from to pay for these rebates? What industry is now suffering or was never created because you wanted to subsidise the solar energy industry? How about you stop subsidising electricity (excuse the wikipedia reference but I'm feeling lazy: the Australian government pays $9-10bn a year keeping the electricity price down) and then maybe people would actually choose for themselves where to get their electricity?

Stop complaining about people using too much power causing outages or killing our planet. If you allow the market to determine how much individuals are willing to pay for electricity (hint: scrap the subsidies/rebates etc), in other words let the price system work, we wouldn't have power outages. The electricity companies in Australia are just one of many government institutions (water, transport are others) that actually advertise telling people not to use their product! What kind of self-respecting business goes around telling people not to buy their product?!

This is just another state band-aid on a state-caused problem at the taxpayers' expense. Wake up and smell the bacon Mr. Garrett, quit wasting our money.