Monday, January 23, 2012

Centrally Planned Failure

If nothing else, the story of the 20th century is the story of the failure of centralized planning.

Everywhere you look, centralized planning has failed.  Whether you call it Industrial Policy or a Five Year Plan the outcomes are clear.  The planners fail. 

The results of the best planned economy fall short of the results of a free-wheeling capitalist economy.

Don't believe that?  How about East Germany and West Germany.  North Korea and South Korea. Western Europe and the US.

And yet, the yen to centrally control economic activity remains strong.

The Obama administration is fully committed to central planning and crony capitalism.

We have seen the results so far with the Solyndra scandal.   $500 million in loans to a company that was already doomed to fail.   No private investor would touch it, and for good reason.  Solyndra's technology was obsolete. It had ZERO chance of survival.  And yet Obama pumped half a billion of taxpayer money into it.   Worse, they did it in a way that made the original investors get all their money back first.   No private loan has EVER been structured this way.  This is a blatant ripoff of the taxpayers, effectively channeling $50 million to Obama's cronies while pissing away the other $500 million.  At this moment the remaining employees at Solyndra are busy filling dumpsters with obsolete raw materials purchased before the company finally collapsed.

Solyndra employees throwing away useless inventory purchased with taxpayer funds

This is not an isolated scenario.  Almost all the loans handed out by Obama for green energy projects have gone bad, most of them before the ink was even dry on the loan.  Add to this the wasted resources on politically directed investment in other areas:

  • GM is building 'green friendly' Volts as fast as they can to make Obama happy.  There is only one problem: the cars are not selling.  Sales are a small fraction of production, and recent recalls of every single Volt will not help sales.  In fact, the news today is that Chevy dealers are refusing to take the Volts that have been allotted to them. This bubble is bursting.

  • Congress bans the incandescent light bulb in favor of CFL's.  But CFL's are expensive, poisonous, and not very effective.  And as so often happens when the politicians try to pick winners and losers, it looks like LED bulbs will eclipse CFL's in the market as a safer and cheaper alternative.   So not only does the government disrupt the marketplace, it fails to pick the real winner. 

  • The government is subsidizing wind power, and wind farms are popping up all over the place.  The problem?  They don't work, they don't reduce oil or gas consumption, and they kill millions of birds. These ugly monuments to  centralized stupidity will dot the landscape for decades to come.

This is a direction that is truly a slippery slope to socialism and the death of American greatness.  We will not survive by abandoning the things that made us great and embracing the cause of others failure.

Obama shows no signs of remorse for having wasted billions.  In fact, he is doubling down:

The $25 million available today comes through the Rural Energy for America Program (REAP), and "will support at least $12.5 million in grant and approximately $48.5 million in guaranteed loan program level awards."

USDA touted this green energy funding as an example of Obama working to "reduce our dependence on foreign oil, combat global warming, and build stronger rural economy." Obama blocked American use of some foreign oil -- piped from Canada -- this week when his State Department recommended that the Keystone XL pipeline not receive a construction permit, pending further environmental impact studies.

If Obama gets re-elected, it will be the end of our experiment with economic liberty, and the final act of our collective suicide.

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