Friday, September 2, 2011

The Dangers of Corporatism

Solyandra is (or was) a company that made solar panels.  As such, it was a darling of the Obama administration's "green energy" initiatives.  However, after receiving $535 million dollars in taxpayer funded loan guarantees as a part of the Obama stimulus, and after a visit from the President,  it  filed for bankruptcy, laying off over 1000 workers--which of course wiped out its loan obligation, leaving Uncle Sam as guarantor holding the bag.  The Los Angeles Times, no right wing rag,  cogently editorializes about the dangers of corporatism:  the government playing favorites with certain private industries or companies.  Here is the money quote:  

The Times answers the first with a yes, saying that risky energy ventures need government backing.  But the second question calls into question the first:  if the government picks corporate winners and losers,  politics, no matter which party is in power, will  inevitably come into play.  Ethanol subsidies are a prime example. Costing taxpayers $6 Billion dollars a year in subsidies, and increasing food costs world wide, subsidies for ethanol have been touted as promoting green energy produced in the United States, mostly by Republicans who want to reward their electoral base in the Midwest.  Democrats like Rep. Welch want to cut the subsidy while advocating subsidies for Democratic favorites like solar power and high speed rail. Powerful lobbyists for these  industries are ensconced permanently in Washington D.C.  The losers?  as usual, the taxpayers.  But other losers are small businesses who are struggling without grants or subsidies because, while they are providing a service or product to the public,  are not on the government's favorites list either because they are not part of the latest fad in Washington, or they cannot afford to employ lobbyists to grab some of Washington's largess. 

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