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February 15, 2012

"The government makes a crappy venture capitalist"

So warned Larry Summers in a 2009 memo warning Obama away from Sonlyndra.

But the government is in the business of politics, not business. These investments were made for political reasons, not business ones.


Like the mythical monster Hydra—who grew two heads every time Hercules cut one off—President Obama, in both his State of the Union address and his new budget, has defiantly doubled down on his brand of industrial policy, the usually ill-advised attempt by governments to promote particular industries, companies and technologies at the expense of broad, evenhanded competition.

Despite his record of picking losers—witness the failed "clean energy" projects Solyndra, Ener1 and Beacon Power—Mr. Obama appears determined to continue pushing his brew of federal spending, regulations, mandates, special waivers, loan guarantees, subsidies and tax breaks for companies he deems worthy.

Favoring key constituencies with taxpayer money appeals to politicians, who can claim to be helping the overall economy, but it usually does far more harm than good. It crowds out valuable competing investment efforts financed by private investors, and it warps decisions by bureaucratic diktats susceptible to political cronyism. Former Obama adviser Larry Summers echoed most economists' view when he warned the administration against federal loan guarantees to Solyndra, writing in a 2009 email that "the government is a crappy venture capitalist."

Markets function well when the returns are received and the risks borne by private owners. There are, of course, exceptions: Governments have a responsibility to fund defense R&D and other forms of pre-competitive, generic R&D—e.g., basic science and technology from nanoscience to batteries—but only when they pass rigorous cost-benefit tests and maintain a level playing field among alternative commercial applications.

On the other hand, political investments go to political allies, to pay for political coverage -- to the tune of four f'n' billion dollars.

Obama paid off his cronies?

Bullshit.

You paid off Obama's cronies.

Obama just wrote the check on your account.

David Gold, a venture capitalist and critic of Obama’s investments in clean tech, said that even if staffers had been removed from the final decision-making, they had the kind of inside access to exert subtle influence.

“To believe those quiet conversations don’t happen in the hallways — about a project being in a certain congressman’s district or being associated with a significant presidential donor, is naive,” said Gold, who once worked at the Office of Management and Budget. “When you’re putting this kind of pressure on an organization to make decisions on very big dollars, there’s increased likelihood that political connections will influence things.”

The Washington Post notices something JohnE. wrote about six months ago.

Steve Spinner, who helped monitor the Energy Department's issuance of $25 billion in government-backed loans to renewable energy projects, was one of Obama's top fundraisers in 2008 and is raising money for the president's 2012 reelection campaign.

Spinner did not have any role in the selection of applicants for the loan program and, in fact, was recused from the decision to grant a $535-million loan guarantee to Solyndra Inc. because his wife's law firm represented the company, administration officials said Friday.

So, who is she and what is the name of the law firm?

Well, her name is Allison Spinner and she is a partner at Wilson Sonsini Goodrich & Rosati. She also personally contributed $2,300 to Barack Obama in 2007.

She wasn't the only employee at Wilson Sonsini Goodrich & Rosati to donate money to Obama's Presidential campaign. A search for donations from individuals with an employer listed as "Wilson Sonsini" and "WSGR" returns over $130,000 in donations. These are donations from individuals, remember. For reference, General Electric donated $529,855 to Obama.

How much did her law firm's clients get from the government?

Oh, a mere $2.75 billion.


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posted by Ace at 06:48 PM

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