Wednesday, December 30, 2009
The Monetary Base is exploding. So what? - Greg Mankiw's Blog
"An article in Saturday's Wall Street Journal says that some big-league investors are betting that inflation will rise significantly. The reason? 'The nation's exploding monetary base is a harbinger of inflation.' Is this right? Probably not."
Solving Whose Problem? - Thomas Sowell
Solving Whose Problem?
By Thomas Sowell
No one will really understand politics until they understand that politicians are not trying to solve our problems. They are trying to solve their own problems-- of which getting elected and re-elected are number one and number two. Whatever is number three is far behind.
Many of the things the government does that may seem stupid are not stupid at all, from the standpoint of the elected officials or bureaucrats who do these things.
The current economic downturn that has cost millions of people their jobs began with successive administrations of both parties pushing banks and other lenders to make mortgage loans to people whose incomes, credit history and inability or unwillingness to make a substantial down payment on a house made them bad risks.
Was that stupid? Not at all. The money that was being put at risk was not the politicians' money, and in most cases was not even the government's money. Moreover, the jobs that are being lost by the millions are not the politicians' jobs-- and jobs in the government's bureaucracies are increasing.
No one pushed these reckless mortgage lending policies more than Congressman Barney Frank, who brushed aside warnings about risk, and said in 2003 that he wanted to 'roll the dice' even more in the housing markets. But it would very rash to bet against Congressman Frank's getting re-elected in 2010."
By Thomas Sowell
No one will really understand politics until they understand that politicians are not trying to solve our problems. They are trying to solve their own problems-- of which getting elected and re-elected are number one and number two. Whatever is number three is far behind.
Many of the things the government does that may seem stupid are not stupid at all, from the standpoint of the elected officials or bureaucrats who do these things.
The current economic downturn that has cost millions of people their jobs began with successive administrations of both parties pushing banks and other lenders to make mortgage loans to people whose incomes, credit history and inability or unwillingness to make a substantial down payment on a house made them bad risks.
Was that stupid? Not at all. The money that was being put at risk was not the politicians' money, and in most cases was not even the government's money. Moreover, the jobs that are being lost by the millions are not the politicians' jobs-- and jobs in the government's bureaucracies are increasing.
No one pushed these reckless mortgage lending policies more than Congressman Barney Frank, who brushed aside warnings about risk, and said in 2003 that he wanted to 'roll the dice' even more in the housing markets. But it would very rash to bet against Congressman Frank's getting re-elected in 2010."
Saturday, December 26, 2009
Venezuela's President Threatens Toyota, GM - WSJ.com
Venezuelan President Hugo Chávez, beset by a recession that is hurting his popularity, has turned his sights on international car companies, threatening them with nationalization and pledging to ramp up government intervention in their local businesses.
The populist leader has threatened to expropriate Toyota Motor Corp.'s local assembly plant if the Japanese car maker doesn't produce more vehicles designed for rural areas and transfer new technologies and manufacturing methods to its local unit. He said other car companies were also guilty of not transferring enough technology, mentioning Fiat SpA of Italy, which controls Chrysler Group LLC, and General Motors Co.
The president ordered his trade minister, Eduardo Saman, to inspect the Toyota plant. He said if the inspection shows Toyota isn't producing what he thinks it should and isn't transferring technology, the government may consider taking over its plant and have a Chinese company operate it.
'We'll take it, we'll expropriate it, we'll pay them what it is worth and immediately call on the Chinese,' Mr. Chávez said in a televised address late Wednesday.
Mr. Chávez, a former army officer who has been in power longer than a decade, has nationalized dozens of foreign-owned companies—and sometimes entire sectors of the economy, including electricity firms, cement companies, coffee companies and oil-services firms."
The populist leader has threatened to expropriate Toyota Motor Corp.'s local assembly plant if the Japanese car maker doesn't produce more vehicles designed for rural areas and transfer new technologies and manufacturing methods to its local unit. He said other car companies were also guilty of not transferring enough technology, mentioning Fiat SpA of Italy, which controls Chrysler Group LLC, and General Motors Co.
The president ordered his trade minister, Eduardo Saman, to inspect the Toyota plant. He said if the inspection shows Toyota isn't producing what he thinks it should and isn't transferring technology, the government may consider taking over its plant and have a Chinese company operate it.
'We'll take it, we'll expropriate it, we'll pay them what it is worth and immediately call on the Chinese,' Mr. Chávez said in a televised address late Wednesday.
Mr. Chávez, a former army officer who has been in power longer than a decade, has nationalized dozens of foreign-owned companies—and sometimes entire sectors of the economy, including electricity firms, cement companies, coffee companies and oil-services firms."
Friday, December 25, 2009
Thursday, December 24, 2009
A bridge too far - How to think about a government-designed health-care system
"Trying to restructure an industry that constitutes one-sixth of the United States economy is indeed complicated. It is so complicated that it's impossible to accomplish without risking catastrophic failure.
Our world is full of complexities that defy human engineering. Can Congress engineer winter snow so that it never again falls on Minnesota? Can it engineer human romance so that none of us ever again suffers a broken heart?
Of course not. Any attempts that Congress might make to do so would be correctly read as arrogance of the highest and most hazardous sort.
Attempts to consciously redesign the health care industry are equally hubristic and hazardous. That industry is one of billions of unique, often personal, relationships, each of which is part of countless long chains of efforts to transform raw materials and human effort into life-improving and life-saving drugs and treatments.
Like weather and the mysteries of love, these long chains of human relationships weren't designed by anyone. Like weather and love, they change, often unexpectedly; they also possess as many unique properties as there are persons involved.
And like weather and love, their all-important details are beyond the comprehension of would-be redesigners. These long chains of human relationships cannot be undone and reassembled at will by politicians and 'experts' without risking enormous and unintended catastrophe.
For proof, look no further than Mr. Schieffer's lament that the very 'engineers' -- the members of Congress -- who are now attempting to redesign the details of the health care industry cannot themselves grasp the full meaning of, or even simply read all the words in, the bill that they're debating.
It's as if a committee of engineers trying to design, say, a bridge to connect New York and London draft a blueprint that is so huge and complex that none of the engineers can possibly comprehend its details. No engineer knows, or can know, exactly what it is he or she is helping to engineer.
Each engineer might fervently endorse the prospect of a bridge to connect North America to Europe. Each engineer might be able to offer a long list of all the wondrous benefits that a trans-Atlantic bridge would bestow upon motorists on both continents.
Some of these engineers might also even insist that crossing the Atlantic by car is a basic human right, one that must be guaranteed by government.
But despite the realness of the benefits of a trans-Atlantic bridge, if that bridge's own designers cannot comprehend what they're designing, no sane person would volunteer to drive across that structure if and when it is built.
If an engineer can't read and understand even his own blueprint, why should we trust him to understand the vastly more complex reality that his blueprint allegedly represents? And, more importantly, why should we trust that what is built based upon the incomprehensible blueprint will work as advertised?
A trans-Atlantic bridge, of course, is not the same thing as a health care system: The bridge is much less complicated.
No matter how complicated the bridge, ultimately it is a physical structure, composed of lifeless materials that metallurgists, chemists and engineers understand quite well.
A human economy is very different. Each person -- as producer and as consumer -- has his own unique abilities and wants. Each person can respond imaginatively to unexpected problems that she encounters. Each person is a potential source of creative new ideas that might improve the operation of his medical office, her research lab or his insurance company.
With hundreds of millions of customers -- everyone from those whose health care needs go no further than an occasional aspirin to those who need round-the-clock care in cancer wards -- and with millions of providers doing countless different tasks, the idea that 535 geniuses on Capitol Hill can design this industry so that it will improve human well-being is laughable.
There are steps that Congress can sensibly take, but all of these involve removing government-imposed restrictions on the abilities of individuals to seek out, and to supply, health care provision within markets."
Our world is full of complexities that defy human engineering. Can Congress engineer winter snow so that it never again falls on Minnesota? Can it engineer human romance so that none of us ever again suffers a broken heart?
Of course not. Any attempts that Congress might make to do so would be correctly read as arrogance of the highest and most hazardous sort.
Attempts to consciously redesign the health care industry are equally hubristic and hazardous. That industry is one of billions of unique, often personal, relationships, each of which is part of countless long chains of efforts to transform raw materials and human effort into life-improving and life-saving drugs and treatments.
Like weather and the mysteries of love, these long chains of human relationships weren't designed by anyone. Like weather and love, they change, often unexpectedly; they also possess as many unique properties as there are persons involved.
And like weather and love, their all-important details are beyond the comprehension of would-be redesigners. These long chains of human relationships cannot be undone and reassembled at will by politicians and 'experts' without risking enormous and unintended catastrophe.
For proof, look no further than Mr. Schieffer's lament that the very 'engineers' -- the members of Congress -- who are now attempting to redesign the details of the health care industry cannot themselves grasp the full meaning of, or even simply read all the words in, the bill that they're debating.
It's as if a committee of engineers trying to design, say, a bridge to connect New York and London draft a blueprint that is so huge and complex that none of the engineers can possibly comprehend its details. No engineer knows, or can know, exactly what it is he or she is helping to engineer.
Each engineer might fervently endorse the prospect of a bridge to connect North America to Europe. Each engineer might be able to offer a long list of all the wondrous benefits that a trans-Atlantic bridge would bestow upon motorists on both continents.
Some of these engineers might also even insist that crossing the Atlantic by car is a basic human right, one that must be guaranteed by government.
But despite the realness of the benefits of a trans-Atlantic bridge, if that bridge's own designers cannot comprehend what they're designing, no sane person would volunteer to drive across that structure if and when it is built.
If an engineer can't read and understand even his own blueprint, why should we trust him to understand the vastly more complex reality that his blueprint allegedly represents? And, more importantly, why should we trust that what is built based upon the incomprehensible blueprint will work as advertised?
A trans-Atlantic bridge, of course, is not the same thing as a health care system: The bridge is much less complicated.
No matter how complicated the bridge, ultimately it is a physical structure, composed of lifeless materials that metallurgists, chemists and engineers understand quite well.
A human economy is very different. Each person -- as producer and as consumer -- has his own unique abilities and wants. Each person can respond imaginatively to unexpected problems that she encounters. Each person is a potential source of creative new ideas that might improve the operation of his medical office, her research lab or his insurance company.
With hundreds of millions of customers -- everyone from those whose health care needs go no further than an occasional aspirin to those who need round-the-clock care in cancer wards -- and with millions of providers doing countless different tasks, the idea that 535 geniuses on Capitol Hill can design this industry so that it will improve human well-being is laughable.
There are steps that Congress can sensibly take, but all of these involve removing government-imposed restrictions on the abilities of individuals to seek out, and to supply, health care provision within markets."
President Obama on "Cadillac" Health insurance plans
OBAMA: "I'm on record as saying that taxing Cadillac plans that don't make people healthier, but just take more money out of their pockets because they're paying more for insurance than they need to, that's actually a good idea and that helps bend the cost curve; that helps to reduce the cost of health care over the long term. I think that's a smart thing to do."
Wednesday, December 23, 2009
Hanoi Weighs Price Controls, Tightens Grip - WSJ.com
EXCERPT:
"HANOI – Vietnam is considering putting price controls on a broad array of products and is cracking down on certain personal and political activity, in a sharp reversal of what has been a move toward more-open markets and a more-open society.
Foreign businesses worry about the threat of price controls—something many analysts consider a hallmark of Vietnam's Marxist past....
Carlyle Thayer, a veteran Vietnam watcher and professor at the Australian Defense Academy in Canberra, says conservative factions in the ruling Politburo are tightening their grip on the country as Vietnam's economic worries—especially inflation and fallout from currency devaluations—grow. He says he expects more crackdowns and arrests to come in the run-up to the country's 2011 Party Congress, a major political event that will aim to map out Vietnam's political and economic direction for the following five years....
In some cases, the proposed rules would allow the government to set prices on a wide range of privately made or imported goods, including petroleum products, fertilizers and milk to help contain inflation as Vietnam continues pumping money into its volatile economy....
"HANOI – Vietnam is considering putting price controls on a broad array of products and is cracking down on certain personal and political activity, in a sharp reversal of what has been a move toward more-open markets and a more-open society.
Foreign businesses worry about the threat of price controls—something many analysts consider a hallmark of Vietnam's Marxist past....
Carlyle Thayer, a veteran Vietnam watcher and professor at the Australian Defense Academy in Canberra, says conservative factions in the ruling Politburo are tightening their grip on the country as Vietnam's economic worries—especially inflation and fallout from currency devaluations—grow. He says he expects more crackdowns and arrests to come in the run-up to the country's 2011 Party Congress, a major political event that will aim to map out Vietnam's political and economic direction for the following five years....
In some cases, the proposed rules would allow the government to set prices on a wide range of privately made or imported goods, including petroleum products, fertilizers and milk to help contain inflation as Vietnam continues pumping money into its volatile economy....
Tuesday, December 22, 2009
The "Costs" of Medical Care: Part III - Thomas Sowell
EXCERPT:
"One of the strongest talking points of those who want a government-run medical care system is that we simply cannot afford the high and rising costs of medical care under the current system.
First of all, what we can afford has absolutely nothing to do with the cost of producing anything. We will either pay those costs or not get the benefits. Moreover, if we cannot afford the quantity and quality of medical care that we want now, the government has no miraculous way of enabling us to afford it in the future.
If you think the government can lower medical costs by eliminating 'waste, fraud and abuse,' as some Washington politicians claim, the logical question is: Why haven't they done that already?"
"One of the strongest talking points of those who want a government-run medical care system is that we simply cannot afford the high and rising costs of medical care under the current system.
First of all, what we can afford has absolutely nothing to do with the cost of producing anything. We will either pay those costs or not get the benefits. Moreover, if we cannot afford the quantity and quality of medical care that we want now, the government has no miraculous way of enabling us to afford it in the future.
If you think the government can lower medical costs by eliminating 'waste, fraud and abuse,' as some Washington politicians claim, the logical question is: Why haven't they done that already?"
The "Costs" of Medical Care: Part II - Thomas Sowell
EXCERPT
"Letting old people die instead of saving their lives will undoubtedly reduce medical payments considerably. But old people have that option already-- and seldom choose to exercise it, despite clever people who talk about a 'duty to die.'
A government-run system will take that decision out of the hands of the elderly or their families, and thereby 'bring down the cost of medical care.' A stranger's death is much easier to take, especially if you are a bureaucrat making that decision in Washington.
At one time, in desperately poor societies, living on the edge of starvation, old people might be abandoned to their fate or even go off on their own to face death alone. But, in a society where huge flat-screen TVs are common, along with a thousand gadgets for amusement and entertainment, and where even most people living below the official poverty line own a car or truck, to talk about a 'duty to die' so that younger people can live it up is obscene.
You can even save money by cutting down on medications to relieve pain, as is already being done in Britain's government-run medical system. You can save money by not having as many high-tech medical devices like CAT scans or MRIs, and not using the latest medications. Countries with government-run medical systems have less of all these things than the United States has.
But reducing these things is not 'bringing down the cost of medical care.' It is simply refusing to pay those costs-- and taking the consequences."
"Letting old people die instead of saving their lives will undoubtedly reduce medical payments considerably. But old people have that option already-- and seldom choose to exercise it, despite clever people who talk about a 'duty to die.'
A government-run system will take that decision out of the hands of the elderly or their families, and thereby 'bring down the cost of medical care.' A stranger's death is much easier to take, especially if you are a bureaucrat making that decision in Washington.
At one time, in desperately poor societies, living on the edge of starvation, old people might be abandoned to their fate or even go off on their own to face death alone. But, in a society where huge flat-screen TVs are common, along with a thousand gadgets for amusement and entertainment, and where even most people living below the official poverty line own a car or truck, to talk about a 'duty to die' so that younger people can live it up is obscene.
You can even save money by cutting down on medications to relieve pain, as is already being done in Britain's government-run medical system. You can save money by not having as many high-tech medical devices like CAT scans or MRIs, and not using the latest medications. Countries with government-run medical systems have less of all these things than the United States has.
But reducing these things is not 'bringing down the cost of medical care.' It is simply refusing to pay those costs-- and taking the consequences."
Friday, December 18, 2009
Behind the Rejection of Kelly as Bank of America CEO - WSJ.com
"Bank of America Corp. directors decided to hire Brian T. Moynihan as chief executive after the U.S. government raised concerns about the potential political impact of the compensation package proposed by an outside candidate for the job, according to people familiar with the situation.
As the Charlotte, N.C., bank was pursuing Bank of New York Mellon Corp. CEO Robert Kelly last week, a Bank of America board member asked Treasury Secretary Timothy Geithner for his opinion on the $35 million to $40 million compensation proposed by Mr. Kelly, one of these people said.
As part of his discussions with the board's search committee, Mr. Kelly sought about $20 million to buy out unvested Bank of New York Mellon shares and options, plus $15 million to $20 million in annual compensation as chief executive. All but $1 million of that amount was to be paid in stock, people close to the talks said.
In response, Mr. Geithner suggested that Bank of America approach Treasury pay master Kenneth Feinberg for his views on what would be politically palatable. Mr. Feinberg said the total amount might cause alarm and be seen as excessive, according to people familiar with the exchange.
...The government's role in the 11-week CEO search is another sign of how regulators are shaping the new banking landscape after coming to the rescue of ailing financial institutions."
As the Charlotte, N.C., bank was pursuing Bank of New York Mellon Corp. CEO Robert Kelly last week, a Bank of America board member asked Treasury Secretary Timothy Geithner for his opinion on the $35 million to $40 million compensation proposed by Mr. Kelly, one of these people said.
As part of his discussions with the board's search committee, Mr. Kelly sought about $20 million to buy out unvested Bank of New York Mellon shares and options, plus $15 million to $20 million in annual compensation as chief executive. All but $1 million of that amount was to be paid in stock, people close to the talks said.
In response, Mr. Geithner suggested that Bank of America approach Treasury pay master Kenneth Feinberg for his views on what would be politically palatable. Mr. Feinberg said the total amount might cause alarm and be seen as excessive, according to people familiar with the exchange.
...The government's role in the 11-week CEO search is another sign of how regulators are shaping the new banking landscape after coming to the rescue of ailing financial institutions."
Tuesday, December 15, 2009
What Red Tape? Auto Community Czar Gets Results - WSJ.com
By MELANIE TROTTMAN
When worries about environmental cleanup costs stalled plans to redevelop an abandoned auto factory in Flint, Michigan Gov. Jennifer Granholm called Edward Montgomery.
Mr. Montgomery, President Barack Obama's auto-communities recovery czar, cut through the bureaucracy at the Environmental Protection Agency, and brought officials from the EPA's Washington office to meet with Flint officials to get a deal done.
The solution: Carve out the part of the 700-acre site with the worst contamination, and clear the rest for potential sale to investors who have told the city they would create a multipurpose facility that would employ as many as 500 people in hard-hit Michigan. A process that could have taken years wound up taking just a few months.
'He's on my speed dial,' Ms. Granholm says. 'He has really been the hub of the wheel for us.'
At a time when the Obama administration is ratcheting up regulatory scrutiny of environmentally sensitive development, Mr. Montgomery is helping communities in struggling auto states find shortcuts through the administration's own bureaucracy, making it easier for the communities to redevelop sites as part of a recovery.
'What many expected to be a multiyear process with the EPA became a multimonth process,' says Flint Mayor Dayne Walling. Given Flint's economic trouble, with unemployment at 25.5% in October, 'time is our enemy,' Mr. Walling says.
Mr. Montgomery says decisions about policy and allocation of funds rest with government agencies, not him. But local officials who have benefited from his help call him a powerful advocate."
When worries about environmental cleanup costs stalled plans to redevelop an abandoned auto factory in Flint, Michigan Gov. Jennifer Granholm called Edward Montgomery.
Mr. Montgomery, President Barack Obama's auto-communities recovery czar, cut through the bureaucracy at the Environmental Protection Agency, and brought officials from the EPA's Washington office to meet with Flint officials to get a deal done.
The solution: Carve out the part of the 700-acre site with the worst contamination, and clear the rest for potential sale to investors who have told the city they would create a multipurpose facility that would employ as many as 500 people in hard-hit Michigan. A process that could have taken years wound up taking just a few months.
'He's on my speed dial,' Ms. Granholm says. 'He has really been the hub of the wheel for us.'
At a time when the Obama administration is ratcheting up regulatory scrutiny of environmentally sensitive development, Mr. Montgomery is helping communities in struggling auto states find shortcuts through the administration's own bureaucracy, making it easier for the communities to redevelop sites as part of a recovery.
'What many expected to be a multiyear process with the EPA became a multimonth process,' says Flint Mayor Dayne Walling. Given Flint's economic trouble, with unemployment at 25.5% in October, 'time is our enemy,' Mr. Walling says.
Mr. Montgomery says decisions about policy and allocation of funds rest with government agencies, not him. But local officials who have benefited from his help call him a powerful advocate."
Obama Slams 'Fat Cat' Bankers - WSJ.com
WASHINGTON -- President Barack Obama lashed out at Wall Street, calling bankers "fat cats" who don't get it, in an escalation of tensions with the industry.
Mr. Obama, speaking on the eve of Monday's meeting with the heads of major banks at the White House, said he would try to persuade bankers to free up more credit to businesses, with the aim of boosting job growth. But the president also expressed frustration with banks that the government has assisted.
"I did not run for office to be helping out a bunch of fat cat bankers on Wall Street," Mr. Obama said in an interview on CBS's "60 Minutes" program on Sunday.
On CBS's "60 Minutes," President Obama decries "fat cat bankers" ahead of Monday evening's meeting between White House officials and banking representatives.
"They're still puzzled why is it that people are mad at the banks. Well, let's see," he said. "You guys are drawing down $10, $20 million bonuses after America went through the worst economic year that it's gone through in -- in decades, and you guys caused the problem. And we've got 10% unemployment."
Mr. Obama, speaking on the eve of Monday's meeting with the heads of major banks at the White House, said he would try to persuade bankers to free up more credit to businesses, with the aim of boosting job growth. But the president also expressed frustration with banks that the government has assisted.
"I did not run for office to be helping out a bunch of fat cat bankers on Wall Street," Mr. Obama said in an interview on CBS's "60 Minutes" program on Sunday.
On CBS's "60 Minutes," President Obama decries "fat cat bankers" ahead of Monday evening's meeting between White House officials and banking representatives.
"They're still puzzled why is it that people are mad at the banks. Well, let's see," he said. "You guys are drawing down $10, $20 million bonuses after America went through the worst economic year that it's gone through in -- in decades, and you guys caused the problem. And we've got 10% unemployment."
Venture Capitol: New VC Force - WSJ.com
"When tiny Fisker Automotive Inc. hit a financing glitch last year, threatening its plan to build a fancy gasoline-electric hybrid car in Finland, it turned to the U.S. Department of Energy.
The DOE had a bolder idea. Why not also step up the company's plans to develop a less-expensive model, and assemble it in a closed U.S. auto plant?
Within months, Vice President Joe Biden, the former senator from Delaware, was helping lure the embryonic car company to a shuttered General Motors Co. factory four miles from his house in Wilmington, right across the tracks from Biden Park. Soon, Fisker Automotive, a two-year-old business that has yet to sell a car, won loans from the federal government totaling $528 million.
Fisker had joined a flock of other businesses seeking cash from the biggest venture capitalist of all, the U.S. government....
Thus, while much attention has been focused on the federal government's involvement in banking, Washington also is gaining sway in another swath of the economy. By financing clean-tech ventures on a large scale, the government has become a kingmaker in one of technology's hottest sectors.
Some young companies are tailoring their business plans to win DOE cash. Private investors, meanwhile, are often pulling back, waiting to see which projects the government blesses. Success in winning federal funds can attract a flood of private capital, companies say, while conversely, bad luck in Washington can sour their chances with private investors. The result is an intertwining of public and private-sector interests in an arena where politics is never far from the surface....
'The existence of an 800-pound gorilla putting massive capital behind select start-ups is sucking the air away from the rest of the venture-capital ecosystem,' said Darryl Siry, former head of marketing at Tesla Motors Inc., a San Carlos, Calif., company that got a $365 million DOE loan in June to build high-end electric cars. 'Being anointed by DOE has become everything for companies looking to move ahead.'"
The DOE had a bolder idea. Why not also step up the company's plans to develop a less-expensive model, and assemble it in a closed U.S. auto plant?
Within months, Vice President Joe Biden, the former senator from Delaware, was helping lure the embryonic car company to a shuttered General Motors Co. factory four miles from his house in Wilmington, right across the tracks from Biden Park. Soon, Fisker Automotive, a two-year-old business that has yet to sell a car, won loans from the federal government totaling $528 million.
Fisker had joined a flock of other businesses seeking cash from the biggest venture capitalist of all, the U.S. government....
Thus, while much attention has been focused on the federal government's involvement in banking, Washington also is gaining sway in another swath of the economy. By financing clean-tech ventures on a large scale, the government has become a kingmaker in one of technology's hottest sectors.
Some young companies are tailoring their business plans to win DOE cash. Private investors, meanwhile, are often pulling back, waiting to see which projects the government blesses. Success in winning federal funds can attract a flood of private capital, companies say, while conversely, bad luck in Washington can sour their chances with private investors. The result is an intertwining of public and private-sector interests in an arena where politics is never far from the surface....
'The existence of an 800-pound gorilla putting massive capital behind select start-ups is sucking the air away from the rest of the venture-capital ecosystem,' said Darryl Siry, former head of marketing at Tesla Motors Inc., a San Carlos, Calif., company that got a $365 million DOE loan in June to build high-end electric cars. 'Being anointed by DOE has become everything for companies looking to move ahead.'"
Tuesday, December 8, 2009
My Big Fat Government Takeover - William McGurn: WSJ.com
"Of course, the kind of people who are apt to push for government-imposed solutions are those who are also apt to believe they will be the ones imposing decisions, not the ones who have to live with decisions imposed by others. Sometimes that's because they enjoy the wealth that gives them escape hatches unavailable to the less affluent, such as their ability to ensure that their own children never have to set foot in a public school. Mostly, however, their trust in government reflects their confidence that they have all the answers and that it's government's job to enforce them.
What about conservatives? Don't we have confidence in our judgment and abilities? Of course we do. The difference is that we trust free citizens to make decisions about themselves—and are skeptical about government. As someone who worked inside a White House, I say you really believe government should be small when you see your friends running it.
... conservatives believe that even our smartest friend is no match for the collective wisdom of the marketplace. If we were to wake up and find that someone we knew well had been given control over some important part of the economy, the conservative would not likely think, 'Everything will be fine now that Harry's in charge.' Far more likely we'd be saying to ourselves, 'If it weren't for his wife, Harry would be wearing red and purple socks every day—and we're giving him that kind of power?'"
What about conservatives? Don't we have confidence in our judgment and abilities? Of course we do. The difference is that we trust free citizens to make decisions about themselves—and are skeptical about government. As someone who worked inside a White House, I say you really believe government should be small when you see your friends running it.
... conservatives believe that even our smartest friend is no match for the collective wisdom of the marketplace. If we were to wake up and find that someone we knew well had been given control over some important part of the economy, the conservative would not likely think, 'Everything will be fine now that Harry's in charge.' Far more likely we'd be saying to ourselves, 'If it weren't for his wife, Harry would be wearing red and purple socks every day—and we're giving him that kind of power?'"
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