The money, of course, is a transfer of wealth via taxation. Government itself produces nothing. However, government policy on taxation, student loans, research etc... play an integral part in economic health and growth. For example, the federal government funding the construction of the current freeway system in the US has very good for the market and allows companies to be more profitable because they can transfer goods from production to consumers country-wide.
Let's not go down this strawman superhighway again. No one has ever mentioned anything, in these ongoing arguments, about the legitimate function of the state in providing infrastructure such as roads, bridges, and sewers. That' s never been a part of the discussion.
Did Runtu say that the DOE provided the *only* source of funding?
I don't think so. He did indicate that it was crucial, however, because private sector interest was minimal, or nonexistent.
Having worked in the early stages of a few startups I know how difficult it can be to obtain funding from traditional VCs, angel investors etc.... Investors are rightfully skeptical of something that is, at the outset, only an idea. When the firm actually starts generating revenue it is MUCH easier to get 2nd and 3rd round funding. Angel and round 1 can be tough -- even if you have a fantastic idea.
I imagine the government, that is, the people, extend loans/grants to firms for the same reason they guarantee student loans: to provide an opportunity for those for whom traditional lenders/investors cannot -- due to their fiduciary responsibilities -- provide capital.
My question is why a government agency like the DOE (and this raises red flags right at the outset), that has unlimited funds and will suffer no economic consequences - let alone political - for utter failure in its economic prognostications, sees "opportunity" where private owners of capital, who will be directly responsible to themselves or to other investors, do not. That's all.
I am the beneficiary of student loans and see them as a great example of how we the people, help our fellow citizens receive an education. Higher education of course, reduces poverty, crime, drug abuse etc.... As part of we the people, I am completely at ease with this type of investment. I'm glad a portion of my tax dollars go to provide this service to my fellow citizens.
This is a classic, textbook example of just the kind of thinking that has sent our entire economy and those of many other Western nations to the very brink of immolation. In case you weren't aware, Seth, the next big bubble to burst is the education bubble, and it will easily compete with the housing mortgage bubble in destructiveness. It must also be noted that the
primary cause of the massive, soaring inflation in the cost of higher education over the last 40 years has been precisely the government's intrusion into the financing of that education -the pumping of easy money and easy credit into the educational market. Highly subsidized or "free" education is very popular. High popularity and easy access means massively increased demand. High demand means higher prices, and hyper demand, which is pretty much what the federal government's loans and grants have created, creates hyperinflation of the cost of educational services.
This has a number of deleterious effects, not the least of which is that it masks the core question of whether there is any legitimate reason the state should be paying for a citizen's education in the first place, at least on anything beyond a very limited and locally, state sponsored scale.
in my opinion the government, that is, the people, rightfully invest in or subsidize the research of technologies or research that have strategic or economic value.
Here' s that interesting assertion again (I think I last saw it from Melchett or Buff) that
the state is the people. Interesting, especially from a German National Socialist or Italian Fascist perspective.
Droopy -- you would be hard pressed to find a bigger champion of capitalism than I. At the same time, I recognize the import role government, that is, the people, play in the free market system.
The only legitimate role I can find, in the writings of the Founders themselves, or in the constitution, is as the protector and guarantor of the unalienable rights, liberties, and associations intrinsic to human existence itself.
Now, does the government, that is, the people, waste money on research or firms (Solyandra) where the risk of failure is too great or on research that has no strategic or economic value? Without question. That's why we hold elections. If our Senators or Congressmen/women spend money inappropriately we can vote them out of office.
Yes, we can, but Seth, we don't. Solyndra is only the tip of a very large iceberg. There's ethenol, the entire "green" energy sector, the Chevy Volt, GM itself, the American sugar industry, public sector unionism,I mean we can go on and on and on. And the reason people do not vote out of office those who control these governmental fiefdoms made of gratuity and special interest pandering is because most Americans, at this point, are in some sense, directly or indirectly, receiving some kind of economic gratuity from the political class. Soft tyranny has a smiley face, Seth, not the face of a Morlock.
The 2010 elections illustrated that when a group of people get motivated and organized, they can shape the conversation. I certainly don't agree with all of the tea party dogma, but just as I see within Ron Paul, there is truth to be found in their positions.
Well I can appreciate your view here, but the problem we face at this point is a complete and radical reevaluation of the proper size, scope, prerogatives, and responsibilities of the state.
It cannot go much farther without coming into real striking distance of the end of America as a constitutional republic. What may emerge on the other side of the final collapse, I cannot say.