May 29, 2012

Video: Solyndra Just the Tip of the Iceberg
Plus: The Socialization of Risk and Reward
UPDATE: Another Video Added

I'm featuring this video over at Blogs4Mitt. If you think Solyndra is the only taxpayer funded "investment" that went bad, then you don't know the half of it.

While the video focuses on Obama's failed loans to his political allies, I think the problem is more fundamental than that.

In a capitalist system private risk is rewarded with private reward. If I invest my money and the investment is good then I make even more money.

But the same is also true if the investment goes bad: I lose.

What Obama has done is tried to fundamentally change our capitalist system away from private risk and reward into one of socialized risk. His administration uses our money to bolster favored industries. This seems all well and good if the investment turns out to be a good one. You will hear endless platitudes from the President in the coming months about the "success" of GM.

So, the fundamental problem with Solyndra isn't necessarily that the company -- and those like it -- are firmly in the pockets of the Democratic party. No, the problem is that when the government invests in private companies it does so at the risk of the public expenses.

Further, do you really think that the Department of Engergy or any other governmental agency knows a good investment when they see it?

Under a capitalist system investors who make bad decisions are punished. It's supposed to happen that way. We want that to happen. It's necessary for the system to work.

But when the government makes bad investment decisions all of us are punished.

It gets worse, though. The Left is constantly complaining about the power that corporations wield in Washington through lobbying to change rules in their favor. This is a valid complaint. Government should not be used to line the pockets of powerful interests.

However, that threat is magnified exponentially when the investor in question is the government itself. Do you really think that the government can stay neutral when it is the government itself which benefits from rules benefiting those companies into which they have invested?

It removes the lobbyists from the equation, but only because those making the investment and those running the government are the same people.

We would never allow a major investor in GE to also run the department of Defense. Yet that is what we do when the government "invests" in private companies that it also regulates.

To believe that government will not attempt to protect its investments in the same way that private corporations do is to assume the impossible: that human nature is suspended when your paycheck is written by Uncle Sam.

Which is why the only way to solve this is not more government "oversight" of .... the government. Who will watch the watchers when we clamor for the watchers to watch themselves?

To paraphrase WOPR from War Games: The only winning move is not to play.

UPDATE: Two things for this update, the first is this very relevant video via Hot Air from American Crossroads on the topic above.

The other item is this comment by J, which is spot on:

To clarify, in socialism, only risk gets socialized, rewards are still private. Take Solyndra and other "green" companies for example. Who ripped tax payer money? Who got paid bonuses even after bancruptcy? Commie-O's pals. Who got stuck with the bill, the taxpayer.

Think of it as a scam (which it actually is), head - I win, tails - taxpayer looses.

By Rusty Shackleford, Ph.D. at 11:14 AM | Comments |