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  • More Green Crony Capitalism

    Green energy investments are coming from every direction. Whether it is the stimulus package or the cap and trade bills proposed in Congress, the government is eager to invest taxpayer dollars in renewable energy technology. As Americans become desensitized to the copious amounts of money the government is spending, clean energy investments are growing from millions to billions. And companies are chomping at the bit:

    Last month, for example, President Barack Obama announced $3.4 billion in government-stimulus grants for power-grid projects. About one-third of the recipients are GE customers. GE expects them to use a good chunk of that money to buy its equipment.

    The government has taken on a giant role in the U.S. economy over the past year, penetrating further into the private sector than anytime since the 1930s. Some companies are treating the government’s growing reach — and ample purse — as a giant opportunity, and are tailoring their strategies accordingly. For GE, once a symbol of boom-time capitalism, the changed landscape has left it trawling for government dollars on four continents.”

    “I think we will do better than most on the stimulus,” says GE Chief Executive Jeffrey Immelt. And herein lies the problem. Businesses know, as Immelt put it, that “the government has moved in next door, and it ain’t leaving.” So they invest time, money and resources to protect their respective bottom lines. Special interest politics, also known as rent-seeking, has always been a part of politics, and it’s unlikely to go anywhere and you can’t necessarily blame businesses for dipping their hands in the government’s pocket if they know the money is going to be spent.

    But money spent on political lobbying is like an all-pay auction. Businesses don’t get their money back if the ball doesn’t bounce their way. The common example used in public choice is bidding a $1 bill. Let’s pretend the auctioneer is the government and businesses the bidders. Business A bids .25 cents and will profit .75 cents. Business B raises the bid to .50 cents and stands to win .50 cents. Business C bids .75 cents and gains a quarter. Business A and B are both out .25 and .50 cents, respectively. They could each bid a dollar to at least break even. If they do that, Business C will be out .75 and could end up bidding $1.25 – then they’d only be out a quarter. And the game continues. And who knows what policy the government will actually choose to implement. It goes from a game of scheming for benefit to minimizing losses with the consumers losing the most.

    Of course the reason the government has to intervene in the first place is that these projects are too expensive to compete otherwise. Any profitable endeavor won’t need the taxpayers’ help. When the government picks winners and losers, Americans lose as taxpayers and consumers, paying for pricier electricity.

    The bottom line, as said by UC Davis economist David Zettland, is this: “Politicians benefit from lobbying; lobbyists compete to receive our money and rights; and citizens suffer.”


    Posted in Energy [slideshow_deploy]

    4 Responses to More Green Crony Capitalism

    1. Pingback: More Green Crony Capitalism | Conservative Principles Now

    2. Freedom of Speech, T says:

      And, this is exactly what the majority of Americans are outraged about. This is exactly why it is a sham for politicians to stand up there and tell how much they care about the average Joe.

      If they really cared about the average Joe, there would be a permanent flat tax of say 10% and a constitutional amendment requiring an annual balanced budget except for national defense.

      If they really cared they would write legislation stating that no elected official or immediate family member could be a lobbyist until 10 years have passed upon leaving office.

      If they really cared they would enforce immigration, especially along our borders, before something really bad gets into our country.

      If they really cared they would show "sincere" humility when called for and admit mistakes. Americans respect this.

      Instead we get arrogance and a "If you don't like it, tough ___ mentality. Some representatives, eh?

    3. Bobbie Jay says:


    4. Don Harper, Lubbock, says:

      If they really cared, they would vote for John Shadegg's (R-Az) Enumerated Powers Act, which he has introduced every year since 1995, and which would require Congress to specify the source of Constitutional authority for every law they pass. According to Walter Williams, this measure has never had more than 54 co-sponsors in the house and has never had a co-sponsor in the Senate until this year. How can they swear an oath to "support and defend" the Constitution if they refuse to acknowledge the limits placed on them by our most basic founding document. Passage of this Act should be the first item in a new 2010 Contract with America.

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