Arnold Kling  

How to Kill Entrepreneurship

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Weird Economics at G-20 Summit... A Guess and a Test...

Make it an exercise in obtaining government money.


Fisker Automotive, a private company based in Irvine, Calif., has received a $529 million loan from a Department of Energy program designed to fund the development of alternative vehicles.

This was announced by the energy secretary who famously said that Americans are teenagers who need their government parents to control them.

I think it's the elite who are totally out of control.


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COMMENTS (9 to date)
manuelg writes:

Leave aside the farce of a "plug-in" vehicle. These Fisker cars will create a lot of jobs for the coal industry in the USA. I don't much mind mercury in the lake fish I eat - at my body weight it would take a lot to bring me down - but I am less excited to further poison myself so these alleged virtuous souls can pretend to be environmentalists.

Leaving aside this particular farce... One question I have for libertarians is: why is the example of South Korea supposed to to be noxious? They have a heavy government hand in all industry. Seems reasonable, seems to produce good results.

Answering my own question, as best I see: The best argument against such a heavy government hand here in the USA would come from Mancur Olson _The Rise and Decline of Nations_. After the devastation of the Korean War, South Korea was starting from scratch. They don't have the burden of steadily accumulating rent-seeker and entitlement government lobbyists, as the USA has accumulated.

david writes:

@manuelg

I wonder whether it's possible for a country to have an arrangement of interest-groups such that virtually all power is concentrated in the hands of a few groups with an interest in longer-term growth.

Caplan might consider Singapore, whose government has been noted to absorb or demolish other civil institutions. It is also a small open economy. So presumably it can be modeled as one rational actor restricted by international competition rather than by local politics.

South Korea is presumably similar, but with its massive industrial conglomerates instead. Since most of their markets are overseas, beyond the control of their own government, there are perhaps fewer attempts at domestic regulatory rent-seeking. They have to be competitive or die anyway.

Pablo writes:

@manuelg
Lobbyists aren't so much problem though. Congress is the problem -- more specifically, individual lawmaker's refusal to disappoint K Street's grandest financiers. Max Baucus, for example, can take the health care industry's massive money for months on end, and then support a strong public option in the health care reform bill anyway. He still gets to keep the contributions. Why he doesn't, I'm not sure yet, but I suspect it may be rooted in the respective political party leadership's influence over its elected members.

SydB writes:

Not arguing for government handouts in general, but the internet was created by government handouts. In fact, DARPA--and the DOD in general--have seed funded an enormous number of technologies that have found their way into the public domain and private technology. Digital communications, signal processing, data compression, encryption--all seeded by government largess.

Certainly a better investment than that iraq handout (e.g. blackwater and the whole kit and kaboodle).

Just saying.

Mark Bahner writes:
Leave aside the farce of a "plug-in" vehicle.

What is the farce?

Babinich writes:

SydB writes on September 25, 2009 8:25 PM:

"but the internet was created by government handouts. In fact, DARPA--and the DOD in general--have seed funded an enormous number of technologies that have found their way into the public domain and private technology."

All government did was act as a venture capitalist. As Larry Roberts points out in the piece below (URL) true innovation comes from cash and freedom; freedom from bureaucracy.

http://fcw.com/articles/2008/04/18/flipside-a-few-minutes-with-larry-roberts.aspx?sc_lang=en

Not a chance lightning strikes twice with medical care reform as it is proposed by this crew.

Gary Rogers writes:

I see Al Gore still has his connections. I just wish it was not my money he is stealing.

JD writes:

Ugh! Energy is Energy! Work is Work! All you are doing is moving the source of the emissions from the tailpipe to the smokestack! Sure, you may get some increase in thermodynamic efficiency, but you can reasonably argue that they will be negated by economic incentives (i.e. costs less to drive = drive more).

A wise Brit once said "You can't contravene the laws of thermodynamics." So far, he is batting 1000. It is the Mechanical Engineers version of "no arbitrage."

In non-scientific terms, it takes a "crap-ton" of energy to sustain our current standard of living. And in terms of energy resources, fossil fuels (i.e. coal and oil) are what work these days.

The only reasonable substitute for fossil is nuclear. And breeder reactors are all that make sense in the long term (the math is so easy that even an economist can figure it out). It is what the French do, and it is where our money SHOULD be going! In the current political climate, however, forgetaboutit.

The childish fantasy of "something for nothing" is woven in to the fabric of the human condition, as is the destruction that its pursuit leaves. Sadly, it invariably falls upon the shoulders of the prudent to clean up, and pay for, the mess.

Disclaimer: I'm a lifelong environmentalist. In fact, I am such a tree hugging whacko, I was driven to work really really hard to become a Mechanical Engineer. Now I do this thermodynamics thing for a living.

tom writes:

Good FT article on how this is a recovery by government. How can we know what should fail?

http://www.ft.com/cms/s/0/c2f7e3d4-a9e9-11de-a3ce-00144feabdc0.html

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