Except that $100 million to that multi-multi-trillion dollar industry is just a small part of the government subsidies it receives.
The free market didn't build the highways.
The free market didn't build the dams.
The free market typically stays away from big projects, especially when there's risk involved, regardless of the potential upside. The free market doesn't care about the good of the people. The free market doesn't care about big steady profits decades down the line if many years of losses must occur first. The free market doesn't care much about pure science.
The free market would have nipped Solyndra and A123 off at the bud. Now my grandchildren have to pay for it.
The free market is the engine that makes this whole thing work. The free market is people. The people own the government, not the other way around. Building bridges, roads and schools is what the free market pays the government to do.
The free market is a short term investment. If profits can't be realized in the short term, it doesn't happen. What that means for the real people of the nation doesn't matter at all. Only profits.
Most small towns wouldn't exist if it was up to the free market. It is only because of the government that utilities and postal service must be provided to small towns, even if it's not profitable.
I'm certainly not saying that all business is bad. That would be a foolish way to interpret what I'm saying. It's that publicly traded companies are beholden to their stockholders, and their only responsibility is to the stock. Everything else is incidental. Privately held companies aren't necessarily that way. Like a church or charity, they can choose to operate for some greater good instead of only to make money for their investors.
I’m going to try to avoid this discussion as much as possible, but here’s a question…
Regarding you quote; why would that be a bad thing? If a city can’t sustain itself, why should it exist? Wouldn’t it be better off as desert/farmland/forest/whatever? New Orleans being another perfect example. A city at the bottom of a bowl, with the whole bowl sitting below sea-level on the edge of a hurricane-active ocean. Why does it exist?
The long railways were built because the government financed them by giving the big railroad companies lots of free land. Even if those railroad companies would have been successful without the land, there's no way they would have come up with the financing on their own because the return on their investment would have been measured in decades instead of years.
The border fence is argued by many as necessary to protect jobs in America, yet not a single corporation is giving their resources to build the fence. Instead it's the government that steps in to build and secure the border.
Many wars are fought to protect trade and resources, yet it's the government that steps in to defend those resources instead of the companies making the money.
I was bringing up those examples of things that grow an economy, and seem to serve real people.
It's not that I think all those things are good. As far as dams go, there are cash register dams that have no real value. Highways cause cities to expand outwards, which manifests in long commutes, congestion and wasted fuel. Utilities and services in small towns allow people to live there that don't have a need to live there, nor the means to provide their own alternatives for utilities and services.
Ultimately what it comes down to is that free trade is quite a rare thing. Businesses are assisted by the government at many levels, and this influences how business is conducted and how we live.
Thank you for your opinion, which I’m sure I should also naively accept as much more enlightened because you suggest it.
Governments already get royalties on natural resources, no reason they have to give the money to contributors and not get a fair share of the return. They don’t have to give the money away, or lend it like a bank could do if it was a reasonable risk.
For those who suggest we look at what venture capitalists do with risky investments, they get at least a fair share of ownership, and often controlling interest and at least a meaningful share of company governance. Doing otherwise is what is naive.
We didn’t build the transcon by not expecting and measuring progress; we didn’t get to the moon by giving out bad loans.
We don’t win in any scientific or business goals by enriching political contributors because they talk a good story - or because of hope and change for the sake of change. We win investing with planned, achievable projects that will continue to have the leadership they need to stay in business long enough for results and payback. Paying off the political contributors, influence peddlers, and closing a business down because they sucked the money out is vulture cronyism.
Venture capitalists succeed not solely by only playing the odds, but because they bring the needed skills and talent to guide company leaderships toward success as much as they can. That’s what enlightened people do when they have their own money at risk. That’s what public officials do when they serve the people whose money they appropriate. Doing otherwise is what is naive.
If you want to argue A123 was a well conceived investment, argue those facts on their merits and not on generalizations.
Resources going to all government projects can be redirected to other important community projects - so each “investment” needs to be justified on specifics, not platitudes. Each failure is a lost opportunity - as such, the focus should be on how to do better rather than to defend failure.
The entire point of government is to pick winners and losers. For example, there are clear losers when it hires its own enforcers to protect commerce at the expense of privateers. This isn’t any different than those governing a private enterprise choosing to open a new walmart in a small town, where the local merchants are losers. Similarly here, the sure winners are those who privatize profits should the endeavor succeed, and socialize loses via taxes and bankruptcy protection should it fail. This is why gov investment in the private sector is a poor idea, but not for the reasons it’s usually assumed to be.
Intelligent decision making means understanding the details so that the best winners and losers can be picked. The quality of such work is entirely tangential to whether it’s a political or profit motive.
Providing financially support is another way of supporting an industry, or trying to bring about change. We frequently see this done in the form of regulations, even if we don't notice the changes because they happen so slowly. Getting new regulations written, passed and enforced takes a lot longer than providing some financial support, and sometimes those regulations go away.
For yet another example, look at electric cars in California in the late 90's. For a few years, the law essentially mandated that 2% of car sales be electric vehicles. So automakers like GM responded strongly and made electric vehicles. The problem is that the law changed, allowing alternatives, and ended up killing the electric car. Now here we are 15 years later trying to do it again, except with the government providing financial incentives. Is it a bad idea? It certainly is if it doesn't work. It's a worse idea if we allow it to fail while other countries keep going and succeed, and then sell us what we gave up on. That's what's happening with solar. We've started and stopped support for the solar industry so many times in the past 35 years that we still have what's essentially a nascent industry. In the meantime, China ran with solar so hard that it killed all but the high end of our solar industry and our government is belatedly responding with dumping charges. We've also had wind turbines for a long time, but the on and off again support has stymied innovation, and now we're 5th in the world behind China, Denmark, Germany and Spain. We used to be #1 in energy back in the oil boom days, but in the future, it's looking like we'll be followers in the modern energy industry. Some people like it that way because they want things to stay the same, even though it's impossible, and continue to resist a lack of change even if it's bad for everyone.
For yet another example, look at 18th century Vienna. It was a very wealthy city that foolishly sought to protect their wealth by passing a law that would keep things the same. What they didn't realize was that while it might preserve the wealth of a few people, it would bring down the economy as a whole. Their lesson to us is that a wealthy vibrant economy comes from grasping change.
Well, it’s a good thing that there are public funds to pay for basically all blue skies R&D, since no one is dumb enough to invest in anything with such a long and unpredictable profit tail. Unless of course they already have a monopoly on the industry, or were granted monopoly intellectual rights by, guess who, the gubmint. And guess what, this valuable research is provided for free to private enterprise to profit from with a few finishing steps, just as public education provides a pool of less-idiotic prospective employees to the same.
So the next time someone insists they built it all themselves without a collective social effort on their behalf, I welcome them to attempt half the whatever success they might’ve had in somalia and see how that works out.
If you’re going to argue the specifics, can you provide some evidence that A123 was a political favor or at least clarify what it is that you’re claiming? They were developing/manufacturing various battery tech for the auto industry, surely a bad “investment” given the non-existence of electric vehicles and the auto industry in general. So is the argument that they should be investing in more fundamental R&D?, or that we should wait for the collapse of oil and hope for the best?
I’m claiming it failed those who put money into the company. Bankruptcy without meeting managements stated expectations is the evidence. I assume/hope due diligence was performed by the government and suggest those who defend the merits of THIS expenditure prove it, and also what improvement should/has/will be made to reduce future risk and increase future opportunities for success. That’s what enlightened people do with other peoples’ money.
Being somewhat familiar with building and executing business plans with both banks and investors of all stripes, I’ve found those who defend an unexpected fail and know what they are talking about can provide the data to demonstrate key planning assumptions for the company and the market overall, along with why the assumptions were missed and related causes.
Given press reports of the company’s extensive political contributions and access to the Oval Office AND the transfer of a large percentage of the renewable initiative, it would seem those defending the use of public funds in a public setting might at least provide basic data for such an unplanned negative event rather than only empty ideology (which I’ve not attacked), and rather than raise questions around a straw position (which is of their own invention, generally to obfuscate their incompetence or the answers - I really don’t care which it is).
Assumptions were made relative to expected progress. Like most, this fail has been coming for a while based on probably several missed assumptions over months, quarters, and probably much longer. Even poorly managed banks keep tabs on the progress of accounts they have a relationship with. I see absolutely NO reason that the administration should not be on top of such a large expenditure and have ready data to back up the original plan, the deviance from the plan, and rational explanations about the fail plus lessons learned. You can bet any bank or investment group would have to immediately demonstrate specifics to their constituents over such a fail because it is a hit to capital if they have cash, or the deficit if they are like the US.
Not to mention, the need for the benefits expected still exist and only become more seriously in jeopardy with each of these fails. Regardless of politics, getting it right with the next expenditure only become that much more important (and difficult when we don’t have real accountability).