But it is indeed a terrible scandal, because the private sector never ever puts money into ventures that end up failing:
No truth to the rumor that he's Obama's new campaign manager.
He then punctuates his point (oh so pithy!) by posting an image of Pets.com and its sock puppet. I’m not sure if the sock puppet is equivalent to President Obama or Solyndra backer George Kaiser, who raised significant funds for Obama’s campaign, in this context.
What I’m also unsure about is if Krugman is an idiot, or just disingenuous, if he believes he can refute the criticism leveled at the Solyndra fiasco – not just from media, but from House investigators wondering how the company secured half a billion dollars in loan guarantees and made it all go up in smoke – merely by pointing out that private investors screw up, too. He cannot possibly be oblivious to the huge difference in moral hazard presented when government throws taxpayers’ money at private business versus when private investors use their own money.
It isn’t that private equity is never lost in business ventures. It’s that there’s a level of accountability when it happens. And there is little doubt that venture capital investors learned a lot from the dot-com bubble. Government will never learn the same lessons, because it throws stolen wealth at the ventures which are best connected politically, not those which it thinks will succeed.
[Here's another departure from our usual syndicated Mimi & Eunice content. It's not strictly IP-related, but it was too good to pass up, dramatizing as it does the simultaneously comical and frustrating disconnect that most people have with regard to problems and solutions involving government. -- GAP]
Supporters of free markets are often attacked for their “Do Nothing Principle” position, which tends to deeply upset policy wonks and media talking heads alike. Obviously this is buncombe, and to the contrary it is these would-be do-somethingers who are intellectually or ideologically incapable of grasping the sweeping scope of necessary changes that free market advocates are calling for.
For example, the charge that “Hangover Theorists” are selfish moralizers who want poor and middle-class families to needlessly suffer during a recession is prima facie incorrect. The interlocutor is simply misled by my yawning enthusiasm for his policy prescriptions into thinking I have no “serious” and “realistic” plan to help society, and that I want to “do nothing.”
Do nothing you say?
To the contrary, I advocate doing a lot, including the complete abolition of the Federal Reserve, the US Treasury, the US Federal Mint, the US departments relating to labor, trade, banking, securities, etc. It is those who want to merely tweak a bit here and there who are hem-hawing over making serious policy changes, and who have the gall to accuse me of advocating to “do nothing”!
The recognition of the insuperable limits to his knowledge ought indeed to teach the student of society a lesson in humility which should guard against him becoming an accomplice in men’s fatal striving to control society [and destroying] a civilization which no brain designed but which has grown from the free efforts of millions of individuals.
– F.A. Hayek
They say that Hayek’s insight also applies to libertarians and, for example, our attempts to “force” free trade and unregulated labor markets on “society.”
Guilds, poor laws, and limits on trade also grew from the free efforts of millions of individuals, did they not? Well, no, actually they didn’t — at least not insofar as they attempted to use the state to impose the preferences of some on others by force!
Libertarians, of course, have no quarrel with voluntary associations and such voluntary actions as charity and boycotting. But… guilds and labor unions have tended to employ the state to impose their preferences on others; poor laws were historically and are by definition instruments of state policy; and limits on trade have historically been imposed on us by the state. There is nothing free or voluntary about them.