Green Collar Dutch Disease

I know that the concept of Dutch disease revolves around natural resource extraction and its impact on competing sectors of the economy, but my own shallow and superficial understanding of economics would lead me to believe that government attempts to promote "energy independence" would fall into a similar trap. Or is the concept fundamentally linked to natural resource extraction and the tendency for government promotion of one sector of the economy to directly and indirectly deindustrialize other sectors of the economy falls under a more generic principle? Anyone know?

First, your definition (including government intervention) seems to be different than what they are using on the Wikipedia page, which focuses on exports and exchange rates, regardless of government intervention.

Second, I don't know how much money is going to be put into renewable energy subsidies (relative to the total economy, or current energy subsidies), but I wouldn't expect it to be so much that it produces such an overwhelming distortion of the economy.

Finally, the Dutch "disease" seems to arise from specialization, the loss of the infrastructure associated with industrial activity, and subsequent loss of flexibility to respond to future market shifts. The focus on energy production in the US would probably produce a more diversified economy, rather than a more specialized economy.

Disclaimer: my understanding of "Dutch disease" is limited to the wikipedia article.

The focus on Dutch Disease is a booming sector of trade goods that are typically natural resources. I think part of this is because it involves a windfall profit, but I could entirely be wrong. The point is that the trade goods can be exported in the context of growing global demand. But if a county pursues a strategy of import substitution, wouldn't this produce a similar result?

Either the county will become energy independent, which will produce a huge distortion of the economy, or we will not, meaning either that voters continue to express outrage or they eventually get over it. I'm not sure which will happen.

The point with Dutch disease is that you have a booming sector and a lagging sector, subsidies to prop up energy production would take away from other sectors of the economy. Labor demands would rise in the booming sector and the service industry. If energy production is paying higher wages than other sectors, more people will go into it. Labor will contract in the rest of the economy. But other sectors with trade goods will have their prices still influenced by the global market, they can't just pay more for workers and drive up prices. Instead, they'll find themselves weakened and out competed in the global market.

Either the county will become energy independent, which will produce a huge distortion of the economy, or we will not, meaning either that voters continue to express outrage or they eventually get over it.

People always talk about "Energy Independence", which gives the impression that they want to produce all energy domestically, but I think it is more of a catch phrase than an accurate representation of their intention. I think that calls for "energy independence" represent an umbrella for a number of things:

lower energy prices
less volatile energy prices
less economic impact from energy price volatility
less revenue being sent to hostile countries
greater political independence from energy-producing regions
less pollution

My point is that all of these goals can be achieved without the massive economic shift that you are envisioning. Furthermore, recent energy volatility should provide a decent incentive for people to adjust their actions to achieve these goals even without government intervention.

bank intervention in the currency markets would predominate over any endogenous shock of internal energy discovery/production in terms of relative exchange rates.

Nonetheless, all things being equal, any "shock" of currency inflow, resulting, say, from natural resource discovery, will likely result in more imports and a decrease in exporting manufactured sectors.

To the extent that the "dutch disease" arises from changes in exchange rates due to exports, I think it is hard to apply to the USA. Our exchange rates seem to be influenced by much more than our export industries -- something else explains the maintenance of the strong dollar in the face of perpetual massive trade deficits.

I'd wonder how a reduction in energy imports would impact the rate of foreign investment in the US (particularly from energy-exporting countries).

centers around the consequences of foreign currency inflows into a country as a consequence of wealth or income shocks typically resulting from natural resource discovery (or significantly increased extraction output). The foreign currency inflows strengthens the home country's currency which can have a depressing effect on non-resource manufacturing exporting sectors of the economy. However, all things being equal, an increase in overall wealth or income is hardly a "disease," and in many respects the concept of "Dutch Disease" is an inverse play on the Broken Window Fallacy(in broken window, we readily see the winners but not the losers; Dutch disease, we readily can see the losers but not the overall winners).

From a libertarian perspective, we shouldn't fall into the trap that "trade deficits" are a sign of economic weakness. Actually, there is no such thing as a "trade deficit." From a balance of payments perspective, you are trading currency for goods. If a country is substantially a larger importer of goods than exporter of goods, then it means there is a strong demand for that country's currency. In a abstract free market, such demand for currency reflects the overall wealth of that country. In terms of the US, it's hardly a surprise that there is a strong demand for the dollar it's since it's been the de facto global reserve currency since Post WW II. In the abstract, there shouldn't be any libertarian critique of a strong dollar or being a net importer of goods and services. It actuality, it should portend a much higher standard of living. Nevertheless, there is a valid libertarian critique of central banks globally intervening to maintain the strength of the dollar because it gives a free ride for ill-advised economic and legislative policies that won't necessarily bear immediate negative consequences, but portend absolute ruin down the road. A question that should be asked is how can a nation so rich in natural resources and serving as a the global currency for the past 60 years nevertheless accumulate so much governmental and consumer debt. Consumer credit was virtually non-existent before the 1970s and now virtually the entire middle class would melt down without it, despite the fact that you now have dual household incomes.

Well, the answer I suppose lies in the fact that "all things are not equal." I suppose Libertarian Class Theory can be employed to explain how marginal wealth advantages or shocks can perhaps serve as a feedback amplifier of parasitic feeding by the political class.