As the late Peter T. Bauer conveyed throughout his work "state-led development policies and the quest for “social justice” would politicize economic life, impair individual freedom, and fail to achieve long-run prosperity for the majority of people." Read more here…
But of course, this common sense approach often escapes the political class and those business people that are ready wiling and able to get grants or never to be repaid loans at the expense of the taxpayer. The lithium ion battery debacle of the last couple of years just reconfirms Bauer's work.
This article in Automotive News by Dave Guilford confirms it as well.
Here's a couple excerpts:
Many observers blame the very Recovery Act grants that Obama cited. By insisting on "shovel-ready" projects that would quickly produce jobs, critics say, the administration created a bubble.
"This was not a free market kind of approach to building an industry," says David Roberts, CEO of battery maker EnerDel Inc. "It was an abnormal market condition."
Bereisa and others also question the federal grant benchmarks, which pushed companies to build plants and hire workers — A123, for instance, was expected to employ 3,000 at its Michigan plants by the end of 2012. The government's "quick, build something" approach created severe overcapacity, he says.
"The total [annual] installed capacity, if you run three shifts, is enough for 900,000 EVs or 1.8 million plug-ins," Bereisa said. "Depending on who you want to believe, that's probably capacity beyond 2020."
Of course not everyone blames the bad public policy suggesting that when people looked at the projections for the lithium ion battery, "anybody who could spell 'lithium ion' wanted to jump in and start this kind of business…"
But of course, many of them would not have done so without the grants from the government. What John Randolph once called "That most delicious of all privileges – spending other people's money".
Electric vehicles might be a substantial part of the automotive market in the years ahead, but because some politician thinks it's a good idea and can give tax dollars away at his leisure, does not make a market happen.
Bankrupting future generations because we think it's a good idea just does not make sense. Governments need only provide the environment and let entrepreneurs use their own money and that of like minded people and if the product is what consumers want, the market for more lithium batteries will result.
And maybe the most important point is the taxpayer will be off the hook.
