Monday, September 19, 2011
The Return of the Robber Barons
The Return of the Robber Barons
by Daniel J. Flynn
The robber barons are back. Washington is replaying That ’70s Show—that 1870s show. The liberals who warned us against the crony capitalists in history books are the crony capitalists in front of us.
Little did we know that green jobs referenced dollars and not the environment. Holding a half-billion-dollar note on bankrupt Solyndra tends to spark such epiphanies.
How could we have been so green?
Administration darling Solyndra never turned a profit in its six or so years of existence. The Freemont, California-based company lost more than $232 million in the year leading up to the Obama administration’s decision to rain tax dollars upon it. An aide boasted to the secretary of energy: “first loan guarantee from the department of energy—delivered in 60 days from inauguration (the prior administration could not get it done in four years).” The federal government’s lending practices have proved as imprudent as those of the bankers they bailed out.
The administration pressured the Office of Management and Budget to give its imprimatur to the loan to jibe with a public relations event. There, two years ago this month, a via-satellite vice -president boasted that Solyndra was “exactly what the Recovery Act was all about.”
Sounds right. The producer of solar panels laid off 1,100 employees. It declared bankruptcy. The FBI raided its offices. The White House press release touting the Solyndra loan bragged, “The Recovery Act is changing America’s economy.” Yes it is.
“Companies like Solyndra are leading the way toward a brighter, more prosperous future,” President Barack Obama once claimed. It was certainly “brighter” and “more prosperous” for Obama’s donors. The department of energy’s restructured loan with Solyndra stipulated that several private investors would get paid before the government in the case that the company went under. George Kaiser, an Oklahoma oilman who donated tens of thousands of dollars to Obama’s campaign, stood to gain the most under this arrangement putting private interests ahead of public money.
Solyndra, once the posterchild of the president’s push for government “investment” into favored companies, is now the posterchild of the campaign against public spending on private concerns. Readers of Human Events were alerted to the boondoggle’s likely demise last year, when Brian Sussman bluntly observed of the San Francisco-area startup: “man, did the American taxpayer get played.” In its total socialization of losses Solyndra may be extreme. But it’s certainly not an outlier as it relates to the administration’s cozy relationship with tax-dollar capitalists.
LightSquared, a broadband company heavily invested in by fatcats who invested heavily in the president’s election, received special administration treatment despite the potential of its wireless program to interfere with military and aviation frequencies. General Electric, run by Obama jobs czar Jeff Immelt, paid no corporate federal taxes last year. The president has taken Charlie Wilson’s alleged aphorism that “What’s good for General Motors is good for the country” to the logical extreme by reworking the GM initialism into Government Motors. Even ObamaCare compelling Americans to purchase a particular product—health insurance—shows the unhealthy alliance between Big Business and Big Government.
When the government puts down the referee whistle to participate in the game, any semblance of fairness yields to favoritism and rules become random.
Public dollars funding private interests is a bad idea for many reasons. The most pernicious effect of crony capitalism is the perversion of creativity in entrepreneurs. Ingenuity naturally spent on pleasing millions of consumers diverts to devising ways to please a few bureaucrats. The market entrepreneur transforms into the government entrepreneur. Solyndra spent two million dollars on lobbying since 2008. Companies interested in being awarded a subsidy rather than winning market share can thrive only under Big Government. And even then, as Solyndra closing shop shows, there is no guarantee of success with subsidy.
That a company requires state subsidy is a sign that it’s a bad investment. If it were the next Microsoft, why wouldn’t anyone risk their own money? You, too, might hit on seventeen if you were playing with someone else’s chips.
Liberal blogger Kevin Drum dismissed the Solyndra scandal by imagining: “It’s all part of the way the free market works.” They don’t know capitalism. They do know robber barons, even if they don’t know it.
Liberals recognize crony capitalism when practiced by heavily whiskered 19th-century gentlemen under top hats. But present-day robber barons need only say “green jobs” to elicit a these-are-not-the-droids-you-are-looking-for effect. It is easier to see the scoundrel in the rearview mirror than it is to see the scoundrel in the mirror.
Posted by Brett at 11:32 AM