It seems that Nobel Prize-winning economist and reliable regime apologist Paul Krugman thinks he can wave away the Solyndra scandal with a reference to an iconic business failure from the dot-com era:
But it is indeed a terrible scandal, because the private sector never ever puts money into ventures that end up failing:
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.
Coyote Blog has a few more salient points in a response to Krugman.
You say it rather strongly, but you have a good point. Also, thanks for the Coyote link.
The big difference is that in government, politicians and bureaucrats decide how to spend and risk other people’s money without their consent. In private enterprise, people consent to the level of risk they take when they invest.
For Krugman not to see that diference suggests a level of carelessness not attributable to ideology. He strikes me as simply a “bad man.”
“The big difference is that in government, politicians and bureaucrats decide how to spend and risk other people’s money without their consent. In private enterprise, people consent to the level of risk they take when they invest.”
My last boss withheld my 401 k contributions, for over two years, and used the money for operating expenses. Now the company has been sold, because he was able to use those funds stolen from me and other employees to make the company seem more profitable than it was. Laws that might hold him accountable are so weak, as to be functionally useless.
In private enterprise, things aren’t always what they seem, and people don’t always give consent to what corporate bosses force them into.
I think between Paul Krugman and Robert Reich, the level of economic heresy and political hackery has never been higher.
These whackos are given a national podium in the NY Times and NPR to espouse the merits of policies that have continuously failed, left economies, countries and entire nations in ruin, most recently in Japan, but mirrored in the past crashes of South America, Eastern Europe, the USSR, South Asia and Even here in America.
These people are more dangerous than disingenuous idiots, they are shills for the perpetuation of failed Keynesian policies that leave bureaucrats and bankers in charge of the fate of the nation. These people need a good tar n’ feathering.
“Is Paul Krugman stupid, or just dishonest?”
Both.
Brian, I believe you missed an additional difference which makes the Solyndra fiasco worse.
The federal government loaned Solyndra money primarily BECAUSE private equity would not.
Solyndra could not longer tempt private capital. Numerous potential private investors stepped forward to say that 10 minutes with Solyndra’s prospectus was all that was needed to see why their offering failed. That the government stepped in defies rationality.
“It isn’t that private equity is never lost in business ventures. It’s that there’s a level of accountability when it happens.”
Enron?
heubler, in what way was Enron not held accountable? The company went out of business once it lost shareholder confidence and its stock crashed. And several of its leaders faced criminal prosecution. Even their auditor Arthur Andersen went out of business as a result of the scandal. Those are pretty harsh penalties for cooking the books.
But when does that ever happen when public bureaucrats waste hundreds of millions or even billions of taxpayer dollars? If the market could treat the Department of Energy the same way the government treated Enron, it would abolish the department and put Steven Chu on trial.