Government-Run… Competition?

In a USA Today article I read of a faltering “green” energy manufacturer that needed government subsidies.  According to the journalist these subsidies ensured competition in the “green”  marketplace.  Me?  Head smack!

While she’s at it she could point out a few other manufactures that could have used government subsidies to remain, shall we say, competitive:

  • Steam engine locomotive manufacturers
  • Analog computer manufacturers
  • Typewriter manufacturers

She did get one thing right.  Real and true competition is at the heart, not only of real and true capitalism, but also of progress.  It edges out old and inferior technologies in favor of better, and more efficient ones.  But these better technologies arise due to the allure of profit, and not because they were propped up by your tax dollars.  

The hard truth of this is just another one of those harsh realities that plagues man’s existence.  And more times than not, feel-good attempts to alleviate the suffering of a few, while ignoring the long term consequences borne by the many, end up causing more pain than it alleviates.

In short here’s a good rule of thumb when it comes to government “investments” into celebrity causes.  Politicians should never be trusted to invest anyone’s wealth except their own.  That a politician desires to invest your hard earned money into some scheme, rather than his own, ought to be a red warning that the investment is a for sure loser.   While yes, it might be a winner for his political aspirations  or he might simply be using your money to shore up some company that’s threatening to suck his own personal investment into a corporate black hole, it is always a safe bet to assume that you are not figured into his interests.

Many a credulous patsy has fallen prey to the charms of a charismatic politician with promises of Utopia.  Don’t be one of them.  Think!

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12 Comments

Filed under Competition, Government, Politics

12 responses to “Government-Run… Competition?

  1. Well said, as usual. “Government investment” is code for “vote buying/corruption”

    • Perhaps a lot of the time it is, but investing in new technology is inherently risky. There will always be successes and failures. There is also much technology in use today that would probably never have seen the light of day if it weren’t for initial government investment in its development. In some cases, the government would also have been the first and only customer, absorbing the high development costs and eventually driving down prices enough to make the product commercially viable. There are a lot of things that were developed by governments during the two world wars that have commercial use today, yet we always sing the praises of whichever firm produces the latest version today, giving no thought to the history of state support.behind the technology. This report is an interesting read. It’s also worth bearing in mind that in all those examples, the state eventually got out of the way and allowed the free market to take over.

  2. Dan,

    As you probably know, economists call the process of inferior industries dying out in favor of better ones “creative destruction.” Economically speaking, it’s The Circle of Life. The old industry becomes the compost heap upon which the replacement industry grows. What the heck is so wrong with that?

    Regarding the bad practice of government picking favorite industries and even individual companies to “invest” subsidies into: It reminds me of the following line from the Oct 3rd presidential debate last fall: “You don’t just pick the winners and losers…you pick the losers.”

    – Jeff

    • One does have to feel for those unfortunate enough to be invested, whether by their resources or career/job, in an industry that is becoming obsolete. I wonder how many people who raised their families on a paycheck with “Smith Corona” written across the top actually saw early on what was coming? Some did perhaps; others perhaps not. I do feel for anyone who gets caught up in such things. But that is one more reason to have a vibrant free market economy so that starting over later in life will not necessarily equate to economic ruin.

  3. Reblogged this on clever nicknames and commented:
    Well said. I would a buggy-whip makers as a turn-of-the-century needed government subsidy.

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