Free Markets, Free People

Government picks another loser

I don’t know how many times we have to point these out or how many ways we have to illustrate that government has no business trying to pick winners and losers, because usually, as with most centralized planning organizations, they get it wrong.  Why?  Because they’re absolutely blind to signals from the market.  Government’s picks are founded more in preference than reality:

Obama touted it in 2010 as evidence “manufacturing jobs are coming back to the United States,” but two years later, a Michigan hybrid battery plant built with $150 million in taxpayer funds is putting workers on furlough before a single battery has been produced.

Workers at the Compact Power manufacturing facilities in Holland, Mich., run by LG Chem, have been placed on rotating furloughs, working only three weeks per month based on lack of demand for lithium-ion cells.

The facility, which was opened in July 2010 with a groundbreaking attended by Obama, has yet to produce a single battery for the Chevrolet Volt, the troubled electric car from General Motors. The plant’s batteries also were intended to be used in Ford’s electric Focus.

Instead:

The 650,000-square-foot, $300 million facility was slated to produce 15,000 batteries per year, while creating hundreds of new jobs. But to date, only 200 workers are employed at the plant by by the South Korean company. Batteries for the Chevy Volts that have been produced have been made by an LG plant in South Korea.

Talk about outsourcing.

Workers are furloughed for one week every month.  And guess who pays for that week?

Boileau pointed out the workers who are on furloughs one week a month are eligible to collect unemployment for that week, and he said the company covers the contributions to their individual benefits during the period.

Reality check commonly ignored when it comes to government:

“Had it been private investors rather than government bureaucrats making the decision, there either would have been a reality check about the industry, or only those who made individual decisions to invest would have lost their money, not taxpayers.”

Instead, government has “socialized” the loss.

The market has moved on – natural gas is cheap and plentiful.  It is the future, at least the near future.  That’s where everything is going.

Meanwhile, the government continues its near unbroken string of picking losers … not that anyone who knows a thing about economics and markets should be the least surprised.  Unlike many other things, this is not “unexpected”.

~McQ

8 Responses to Government picks another loser

  • We pretend to work, and they pretend to pay us.

    So the nominally employed workers at Crony, Inc. get carried as “jobs saved or created”, while collecting unemployment 1/4 of the time.
    A-FLUCKING-mazing.
    AND, GM is more a zombie than really “alive”.
    http://danieljmitchell.wordpress.com/2012/10/15/if-the-auto-bailout-was-a-success-id-hate-to-see-what-a-failure-looks-like/

  • Now now, we can’t say this was unexpected.  The same people with the economic sense of a drunken college student gambling at a casino or the pony track really expected they were going to win, and ONLY going to pick winners.
    Now they’ve discovered this market thingie is more difficult to predict then they thought, even when they use government to put both feet and hands on the scales and hop up and down on them to try and swing the price balance away from fossil fuel and towards ‘natural’ electrical power (by making EVERYTHING cost more….).
     
    Trust me, they never expected the world and reality wouldn’t conform to their vision.  But we should remember, they had good intentions!
    Now, see, if they weren’t so insistent on throwing out western religion, they’d know what the road to hell was paved with.  Not that that would have stopped them, they think our destination under their guidance is a resort.

  • As I understand, the only manufacturing jobs returning to the US are those where the labor costs in China have become prohibitive, and labor is cheaper in America.

  • The government didn’t pick a loser.  The public failed to follow the sagely advice of the Obama administration.
    And I’ve got some lovely beach front property in Montana to sell you.

  • Hmmm, not sure why my previous comment is not showing up.  Anyway, Obama picked another loser in A123 Systems, an electric car battery maker that filed for bankruptcy today.
    http://www.bloomberg.com/news/2012-10-16/electric-car-battery-maker-a123-systems-files-bankruptcy.html?cmpid=yhoo
    It looks like the winner here is going to be China.  Way to pick’em Obama!

  • Government’s picks are founded more in preference than reality:

    Busted link.
    Anywho…the left doesn’t understand incentives or penalties, either in commerce, or societally (think: jobskills/work ethic vs. welfare, criminal activity pooh poohing, etc).
    And you can’t blame them – they live in Never-Never land that most of us outgrow by the time were in puberty.