Krugman Misses the Point (Is that An Evergreen Headline or What?)
But [Solyndra] is indeed a terrible scandal, because the private sector never ever puts money into ventures that end up failing:
And then he puts up an ad from Pets.com, a very famous private equity disaster. My quick thoughts
- As I have said over and over (specifically comparing Solyndra to Pets.com weeks before Krugman thought to) Pets.com did not take my money. Solyndra did, and without my permission too. Yes, the fact that it was my wealth Solyndra destroyed matters.
- If my money manager had invested in Pets.com, I would have been pissed at him and demanded accountability. In fact, the entire VC sector and most of the stock market started to entirely rethink their approach to Internet investing after Pets.com blew up so spectacularly. So it is odd that Krugman would use the Pets.com example as an excuse that this Administration NOT face any accountability for Solyndra and NOT rethink its approach to investing in private companies.
- Pets.com was an investment made after hundreds of other Internet companies had been funded - it was the marginal investment, in some sense, after the low-hanging fruit had been funded. Solyndra, on the other hand, was the first company funded by this Administration under this program. It was their #1 choice.
- Public loan guarantees are always going to go systematically to the worstinvestments. As I wrote in the article linked above
...government loan guarantees go only to those companies who the free market has chosen NOT to fund. If the free market was willing to toss another half billion into Solyndra, its owners would not have been burning a path back and forth to Washington. So by definition, every single government loan guarantee in this program is to a company or a technology that the free market, knowledgeable investors, and industry insiders have rejected as a bad investment. For the program to work, one has to believe that Obama, Chu, and some career energy department bureaucrats have a better understanding of commercializing technologies than do private investors (who are investing with their own money) and industry experts.
- If it were the job of the President to be the venture-capitalist-in-chief, would you have chosen Barack Obama for this position? Would he even be in your top, say, 20 million choices? If I gave you a choice of Barack Obama or a random person snatched off the street of lower Manhattan, who would you choose to make these investment choices?
Anonymous Mike:
For the past 25 years or so the advocates of big active government have been trying to recast spending and interventionist policies as "investment" - so that every big program will in a sense pay for itself somewhere down the line. You know more money today for Head Start means less money spent on electricity in the future running the electric chair to execute those who turned to a life of crime because they weren't in a good pre-school program.
We know this is crap, anyone who has manage their own retirement account knows it's crap. However as political jitjitsu it was brilliant because it allows liberals/progressives/statists to argue on the same plane as limited government types in terms of use for the marginal dollar - you're not asking to spend money, you're "investing" despite the fact that the payoff is so far into the future that it is impossible to effectively manage.
Also it allows statists to argue for more tax money. A good example of this was in Canada several years back when a Liberal Party minister railed against a proposal that would put cash back in the pocket of citizens saying that "they would waste it on popcorn and beer."
But I digress.
Dr. Krugman's comments regarding Solyndra and Pets.com is simply an updated version of the statist version of investment except now they want to dump money into companies in addition to social welfare. I think Coyote knocked it out of the park and thank goodness because we're going to need that pushback.
Don't be too hard on Krugman because he serves the higher purpose of dimwitted hubris - he is not only worshipped by those on the Left but his arguments are lazy and wrong-headed. He is sucking up the oxygen that might be better used by someone else on the statist side
I think Coyote Blog has beaten this concept to death - if it would only truly die. Anyone who invests their own retirement portfolio sees the problem with this approach right away - investment requires both monitoring of results and portfolio adjustment (i.e. accountability.) Whatever the motive for the initial investment, portfolio management in a political environment will be managed politically. If this was a true VC-funded environment....
...well it just isn't given the political iron triangles in Washington and the ability to raise vast sums of money through an extensive taxiation scheme
September 25, 2011, 1:01 pmTed Rado:
It has been obvious for half a century that anything that can be done by competitive private enterprise should NOT be done by government. Obama is illustrating this in SPADES!
Everyone is discussing what to do to straighten out the economy. The answer is simple. Get the government out of all this crap and give American entrprise free rein. There should be a review by a non-political group of experts of ALL government agencies and activities. Those that can be done by private enterprise should be discontinued. The remainder should be studied critically to see if they are effective, and those that are not abandoned (most freeby programs). The remainder, such as social security, must be put on a sound financial basis, painful as that might be.
It is interesting that some of the members of Congress who are the most critical of the Solyndra thing voted for ethanol subsidies. It is apparently OK to rip of the taxpayer if it to my benefit, but not to someone else's benefit. What a bunch of mealy mouthed political hacks. I want mine; screw you.
September 25, 2011, 2:27 pmanoNY:
"If I gave you a choice of Barack Obama or a random person snatched off the street of lower Manhattan, who would you choose to make these investment choices?"
Watch out, with the silly little protest down there right now you might actually get someone worse than Obama on the investment-ability continuum...
September 26, 2011, 4:09 amSmock Puppet, Professional Clue Rhabdomancer:
>>> Krugman Misses the Point
In other equally unexpected news, a dog bit a man today in the state of Texas...
Face it, the problem with Krugman is that he couldn't FIND the point with both hands if you gave him his hat as a bonus tool.
September 27, 2011, 7:55 pmSmock Puppet, Professional Clue Rhabdomancer:
>>>>> If I gave you a choice of Barack Obama or a random person snatched off the street of lower Manhattan, who would you choose to make these investment choices?
>> Watch out, with the silly little protest down there right now you might actually get someone worse than Obama on the investment-ability continuum…
Dude, you could pluck someone at random from the streets of Cabrini-Green and have a high probability of getting someone who would do no worse than President Downgrade. A lot of those people have a basic business sense because they're running one off the books.
September 27, 2011, 8:06 pmSmock Puppet, Professional Clue Rhabdomancer:
More critically, if my investment adviser authorized some highly questionable maneuvers which placed me lower on the "recovery" totem pole, then turned out to have an inappropriate relationship with/to the one who most benefited from that... someone named, say, "Kaiser"... I'd be just one of many in line to sue and reverse the maneuver, with a substantial likelihood of success.
As a taxpayer, I probably don't even have STANDING to sue.
September 27, 2011, 9:23 pm