Sunday, September 18, 2011

Activating trash

Continuing the previous conversation of why the government cannot "activate wealth" by investing into garbage.

First, it seems to be a very clear idea that if a company failed, it happened because the consumers chose not to buy its products, but went for the competitors (it's not like Americans decided they have no money for cars; it's also not like nobody in the world buys cars; Americans buy cars, and people throughout the world buy cars — just not the Fix Or Repair Daily brand). Investing more money into such a company is throwing bad money after the good. What needs to happen is for the company to sell off its assets to the companies that know what to do with them and let its workers be hired by the companies that can employ them to a better use.

Second, it seems that if the government has to invest in a business, it means that the private investors decided that this investment is not worth it. (The argument that some CEOs are overly reckless with their ivestments, because their personal gain from a return outweighs the possible risks of the failure which are shared equally by the investors, actually makes this point even stronger: even such overly reckless investors did not deem such garbage companies as GM worth investing in!) So, someone who supports stimulus basically thinks that Obama and his advisers are better at finding investment targets than entrepreneurs.

Now, let's read the news from National Palestinian Radio about Solyndra:
Administration officials defended the loan restructuring, saying that without an infusion of cash earlier this year, solar panel maker Solyndra Inc. would likely have faced immediate bankruptcy, putting more than 1,000 people out of work. 
Even with the federal help, Solyndra filed for Chapter 11 bankruptcy protection earlier this month and laid off its 1,100 employees.
No way! A company was on a bring of bankruptcy; it got a loan from the Federal Government, and it still filed for bankruptcy and fired all of its workers (plus extra 100 which it apparently hired after getting the loan). So, we are back to where we were, except $528 million poorer.

Now, there is no way someone could have foreseen that happening.

Oh, wait. I am predicting the liberal rebuttal: the problem is that we did not invest enough! Had we invested a couple more billion, the company would not go under and fire all those poor workers. This tragedy happened because of all those stingy Conservative bastards.

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