Tag: subsidy

Categories
free trade & free markets national politics & policies too much government

Clunker Flunked

When the Obama Administration hit the ground running in 2009, one of its first “hopeful” and “audacious” programs was “Cash for Clunkers,” a sort of triple-​action economic stimulus, carbon-​emission reduction, and automaker bailout bill. Congress got on board, a lot of trades were made, billions spent. There was much brouhaha.

Skepticism should have been the order of the day, of course. So many things could have gone wrong.

And did.

Now, with the clarity of 20 – 20 hindsight, a consensus emerges: Cash for Clunkers was a clunker itself. An economic analysis from Resources for the Future is just the latest (mostly negative) judgment: “[T]he program increased new vehicle sales by about 0.36 million during July and August of 2009, implying that approximately 45 percent of the spending went to consumers who would have purchased a new vehicle anyway. Our results suggest no gain in sales beyond 2009 and hence no meaningful stimulus to the economy.”

Further, fuel economy gains and pollution reductions were minuscule.

The study is far from exhaustive. A lot of old cars were scrapped, recycled. Guess what this does to the used car and parts market? It’s been devastating.

Who’s hurt by supply reductions and consequent price rises? Cash-​strapped folks, the kind of people who usually buy used cars, or keep old cars running — which is a lot of people during a depression.

I bet that Cash for Clunkers served, on net, to transfer wealth from the working poor to far wealthier individuals.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets too much government

Saab Stories

Saab Automobile appears to be going down. The Swedish automaker was abandoned by its beleaguered parent company, General Motors, prompting the Swedish managers to petition the Swedish government for a bailout. In 2009, the Scandinavian government said “No.” GM then sold Saab to a Dutch manufacturer, which hit a cash crunch in this year’s first quarter. 

Lots of people with fond memories of the pre-​GM Saab thought that the Dutch outfit had a great idea: Revive Saab by reintroducing a 1940s look, the famous Saab 92.

But the financing fell through, sending Saab begging, again, to the Swedish government, with promises of radical restructuring.

A western Swedish district court again ruled, “No.”

This is not good for the people of Trollhattan, where Saab’s main plants reside. They will be hard hit, as in any disaster.

What is interesting is that, though many folks of Trollhattan have repeated the old social democrat line about how they are “people” who somehow deserve their incomes and such, the government refused to go along with the old bailout model.

One could argue that the oft-​idolized Swedish nationalization/​capitalization/​marketing solution was the model for America’s 2008 and 2009 bailouts. The method looks less popular, these days, in its home country.

We’re living in tough times, getting tougher. Still, at some point we’ve got to bite the bullet and resist trying to “fix” failed businesses by government. 

Governments fail often enough, themselves, without moonlighting this extra job.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets national politics & policies too much government

A Million for Each Congressperson

A business filed for bankruptcy last week. 

These have been tough times, so that’s not a shock. What makes the story juicy is that the FBI raided the company’s headquarters two days later.

The company? Solyndra, a solar panel manufacturer. A few months earlier, it had been boasting a profitable return on investment. And, as President Obama had proclaimed the previous year in a visit to the California outfit, Solyndra was precisely the kind of company that deserved federal government assistance. It was so cutting edge, so innovative, that it deserved a huge loan guarantee, to the tune of $535 million. 

The raid occurred on the same day as the president’s “jobs” speech last week. Yet, Mr. Obama neglected to include an update on his administration’s previously self-​praised policy of industrial subsidy pertaining to that very company.

Republicans are making much of this. They are themselves not immune to (indeed, during the Bush years they excelled at) just this sort of corruption.

And it is corruption. The Solyndra deal went down after major investors in the company gave millions in support of the Obama presidential campaign. It was fast-​tracked as part of the federal government’s Keynesian “stimulus” spending.

This is how the politics of modern mercantilism — of systematic “business-​government partnerships” — works. The moneymen support the politicians who support the moneymen.

It’s one way to get rich.

And gain (and maintain) power.

But it’s not good for the country.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets too much government

Backbreaking Spending

Pennsylvania’s Republican governor, Tom Corbett, went into back surgery last week. The Pennsylvanians who voted him into office may be hoping he’s getting a backbone installed. But no such luck: Doctors call his treatment “routine.”

Too bad, for Corbett needs something to help him stick to his campaign promise of  “saying no” to spending.

Since taking office Corbett has  radically increased the salaries of his executive staff as well as stuck the state with another big sports stadium project.

Just what a cash-​strapped state needs!

There’s a huge philosophical problem with forcing some folks (say, opera buffs) to pay for the entertainments of other folks (say, my fellow sports fans). It’s just not right. (It’s wrong the other way ’round, too.)

It’s also silly economics. And increasingly unpopular. People are “stadium fatigued,” according to Chris Friend in The Philly Post. Worse yet, the particular minor league stadium Corbett just pushed will accrue benefits chiefly to the New York Yankees, not the Philadelphia Phillies (or even the Pittsburgh Pirates). It’s a bizarre project, when you think about the cui bono of it. 

Finally, when you think of who pays, the stadium’s $20 million price tag marks only a fraction of the cost, since the bond for that figure will balloon over time, with interest due.

Paid for by Pennsylvania taxpayers.

I love sports. I look forward to the day when the industry is as self-​sufficient as it ought to be, and people like Corbett have the spines to stay out.

This is Common Sense. I’m Paul Jacob.

Categories
too much government

Moolah for Media

Has Congress rescinded the Obamacare yet? No?

Bad news if you favor free-​market medicine. Nifty news if you’re a doddering corporate dinosaur of old media — like the Washington Post and CBS New and NBC News — with millions, or billions, in the kitty. And zero compunction about holding out a tin cup for funds extracted from taxpayers.

The Cato Institute’s Michael Cannon alerts us to the emergency resuscitation these institutions are receiving from Obamacare’s “Early Retiree Reinsurance Program.” The Post got $570,000 in extracted-​from-​taxpayers payoffs (some critics call ERRP a “slush fund”); CBS got $720,000; and General Electric, one of the owners of NBC Universal, got $37 million. Verizon, AT&T and sundry labor unions are also snatching up the subsidies.

There’s $5 billion allotted to this Obamacare slush fund for early retirees, which is not supposed to run out until 2014. But almost $2 billion have been distributed to corporations already. (To be fair, everybody knows that early projections of the long-​run costs of wondrous new government programs tend to be conservative, understated, modest, even bashful.)

Cannon and others argue that when reporting on Obamacare, journalists at such outfits should disclose that their employers have received the massive subsidies. Let viewers know about the bribes so that they can better evaluate the pro-​interventionist spin typical in these venues. 

Fine. But I have an even better suggestion for the wealthy corporate mendicants: Don’t take the cash to begin with.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets national politics & policies too much government

America’s Dirty Nuclear Secret

Before Cherynobl, we could sort of dismiss nuclear power’s danger. Afterwards, we could still say “Well, that’s the Soviets, for you.”

Now, with the ongoing Fukushima Dai-​ichi disaster, the extent of what can go wrong is becoming horrifically clear, especially now that it looks like merely gaining control of the worst-​off reactor could take months, not days. 

It rightly makes us worry about the whole industry.

It’s a pity, too, because nuclear power concentrates its costs (spent fuel in containers) while providing enormous marketable benefits. Burning coal, on the other hand, disperses its “costs” in the form of pollution. Nuclear power would seem to be a perfect market solution.

But a “meltdown” — or just losing control of a fission process — concentrates harms in a manner hard to ignore or justify.

We hear that new nuclear tech is in development, and might become quite safe. But the promised extra-​safe variety is not yet online anywhere, yet. 

Why?

Could it be because government protects the currently unsafe technology? America’s nuclear power is protected from the rigors of risk as assessed by the cold, calculating insurance industry under 1957’s Price-​Anderson Nuclear Industries Indemnity Act, which shifts risk from investors to taxpayers in case of catastrophe.

Perhaps if that were repealed, better nuclear tech would emerge faster.

As it is, our old nuclear tech awaits a rare convergence of disastrous factors, like a major earthquake plus human error, or terrorism plus x.

This is Common Sense. I’m Paul Jacob.