By Pete Speer -
The mask finally came off the President last Saturday.
He is a believer in Socialist-Soviet type Central Planning but is trapped -- like Congress generally is -- in a spoils system. We therefore can mix in the inefficiencies of the political cash register.
Take Solyndra, please. Take the whole navy Green Fleet, as well. With the Navy paying his supporters and Democrat "venture capitalists" super prices for green fuel.
'...“You need that big anchor customer. And the Navy can afford a premium, because it knows how much petroleum really costs,” explains Brook Porter, an investment partner at the venture capital firm Kleiner Perkins Caufield & Byers, which has put more than $1.5 billion into so-called “clean tech” companies. For some of these firms, a big military contract could mean the difference between life and death...."
Venture capitalists are the people supposedly putting money at high risk for high returns. Not here. The Navy would spend an additional $1.6 Billion for green fuel. I wonder if this might be payback for the losses in Solyndra and others. There is nothing an investment banker likes more than to take the risk down to zero. He would be grateful, very grateful, to the party which provied the "free money."
Just like Chicago -- but that is another story, or is it?
It is the ability of the government to allocate your taxes and the debt it accumulates to make an efficient economy? Shadows of Stalin on the White House Walls. Perhaps the better analogy would be to look at what Central Planning Authority did to/for East Germany
When the wall came down, compared to the Capitalists in West Germany, it revealed an economy in shreds. Planned economies need take no risks, need receive no returns. No new wealth need be created. Life is lived at the lowest common denominator the people will accept without overturning the government. In a dictatorship like East Germany, that was mighty low. They had to build a wall to keep the West Germans from overflooding the East, remember?
The risk in Capitalism destroys the wealth of the inefficient but creates more wealth than before.
We are back to the days of Teddy Kennedy who was remarkably clear headed when he opined that every dollar of GDP is a "Tax Expenditure" created by the government which permits and directs private prosperity. The hated one percent need therefore to be eliminated, their activities curtailed through taxation. Let the Government decide on how much the private sector can have.
The dirty little secret is that the one percent became that way by creating new sources of wealth, not by taking from the ninety nine percent.
Unfortunately the financial sector did it with the collusion of the government protecting them from failure in the financial sector. Even today the largest banks can borrow from the Fed at close to a zero interest rate and redeposit that money, receiving at interest 0.25%. That may not mean much to us galoots without that privilege, called "arbitrage." We are not talking about small deposits we are speaking about deposits of greater than one hundred million, each, on which a clear riskless profit is earned.
Even if there were a high loan demand in the private sector -- and there is not -- why should the banks put money at risk as they are supposed to do?
Creating new wealth in real assets is done by creating product to meet a demand and being able to price the product to assure an exchange of goods for money. Jobs flow from this and paid work gives provides for the funding of this exchange. That is capitalism. The government doesn't do it, we do it.
In a free society formed by the mysterious intermixing of people's demands for interclass mobility, made possible by geographic mobility and backed by the functioning family unit we see the continuing creative destruction of wealth and the fertilization of new wealth. The government functions to ensure no more than the equality of opportunity, and the availability to the people through schooling of maximum knowledge. Opportunity does not equal capability. In the free market all may be given equal opportunity, but the less capable must tailor their aspirations to their abilities. The right to succeed is not guaranteed; the right to fail is.