Eggs, Baskets, and Sin

I have a lot of sympathy for the residents of Wiscasset, Maine. Here's the story, as reported in the Boston Globe:

Its nuclear plant shut, Maine town full of regret

The story focuses on the economic impact of the closing of the Maine Yankee power plant, the largest employer in the region. I sympathize because we had a similar situation here in Union, SC when the once-bustling textile mills shut their doors and moved their operations overseas, putting most of our citizens out of work. It took us a couple of decades to recover, which we're doing with the help of the automobile industry.

Maine Yankee didn't move operations; they shut down due to safety concerns, and the fact that it would have been more costly to fix the problems to the Nuclear Regulatory Commission's standards than to go out of business.

Now, a lot of thoughts went through my head simultaneously when I read the story:

1. Those poor people.
2. Plenty of people didn't want the plant in the first place. A group called Citizens for Safe Power opposed it from its inception. Would it have been better if they'd've gotten their way?
3. It's damned near impossible for a pressurized nuclear facility to go out of business. It took nearly $600 million over 15 years to shut this place down, and they still don't have a place to put the waste. And here they are, shut down, and still pay a million a year in taxes.
4. There are a bunch of better, modern designs for nuclear power plants, superior to the high-pressure designs of the early 1970s. Thorium reactors and pebble bed reactors come to mind.
5. The exploration of space is nearing the end of an era. Plutonium is used to power unmanned spacecraft. Because of reductions in nuclear production, we only have about 36 pounds of plutonium left in the US, and we're going to use all of that up by the end of the decade. 
6. The Maine Yankee plant paid for 96 percent of Wiscasset's budget until 1996.

There's material for a score of blog posts here, but that last one floored me. NINETY SIX PERCENT. And they bought a lot of stuff with that 96 percent... really great amenities that small towns usually don't  see. We don't, and our population is more than double Wiscasset's. Free sewage, free utilities, free cable, subsidized sports and education. Free money, free money, free money. I'm not criticizing... I mean, the money was there... but they put a lot of eggs in one basket. And they didn't have a back-up plan.

And when that basket was gone, the residents found they still wanted the stuff, and Daddy Warbucks wasn't there to pay for it. So property taxes shot skyward. One resident reported his taxes increased from $180 per year to $4,000 per year. That might as well be blood from a turnip for the residents who simultaneously lost their jobs.

From my armchair across the country I think about a number of things I consider to be wrong with this scenario. All those eggs in one basket for one thing. Of course, I'm looking at it with the 20/20 vision gained from our own experience. It's better to diversify your sources of revenue than to have the vast majority of people leech off of a minority that isn't guaranteed to be there in perpetuity.

They succumbed to the temptation of all that money to provide a lot of "free" services that governments shouldn't have anything to do with. But that's my Libertarian mindset talking. In my town, the City owns the utilities. But we don't give away free power and cable. And we do use it as a revenue source to keep the taxes low, though not as a way to abrogate our individual responsibilities to contribute. Then again, we don't generate electricity to power half the state.

Then there's this: from here it looks like they based an economy on something people wanted to shut down. And it got me thinking about all the other ways people do the same sort of thing. Although it's not popular to increase taxes in general, it's a lot easier for a majority to get away with taxing something a minority does that the majority doesn't like... a "sin tax". For instance, in New York the tax on a pack of cigarettes is $4.35 because smoking is bad, mmm'kay?

"Tobacco tax increases offer a win-win-win solution for states, especially as they face a severe fiscal crisis and work to balance budgets while preserving essential public services." [link]

And if they really just wanted the revenue, they'd encourage use to increase the tax base. But that's not the whole story. Usage does drop. Revenues increase overall because the taxes are raised faster than the decrease in smokers. For every ten percent increase in the price of a pack of cigarettes, youth smoking rates overall drop about seven percent [link]

Anyway, the thought here wasn't really about smoking, or any other particular sin tax, but the idea of basing a large portion of your revenue on something you don't like, and which you might be successful in getting rid of (like nuclear power). The people benefiting from them may love the profits, but what about the all those protesters who hate it and campaign incessantly? Those priests of the environment and the unsolicited custodians of the health and well-being of complete strangers?

What happens when they get their heart's desire?
What happens when there's no more sin to tax?
What happens when the sugar daddy packs up and leaves?