Public/Private Partnership carried to its logical conclusion

Anyone with the least ethical sensitivity would steer well clear of the nearly invisible line between “public/private partnership” and “corporatist whoredom.”

That line proved too faint for Barack Obama and Jeffrey Immelt. Immelt will continue to serve as CEO of General Electric while simultaneously shaping the competitive environment for his competitors the nation. The President’s appointment of Mr. Immelt to head the Council on Jobs and Competitiveness can be distinguished from similar actions in Mussolini’s Italy primarily because of the good intentions of the participants. I’m not sure which set of participants.

The CFLs (Compact Fluorescent Lightbulbs) will run on time. Important, since GE recently closed the last US factory making incandescent light bulbs – because of a Congressional mandate to ban incandescent light bulbs for which GE lobbied. (CFLs are made almost entirely overseas, mostly in China. GE’s CFLs come mostly from Asian factories.)

There is more on Immelt’s appointment to be found at these links:
He melt for Obama
What’s Good for Jeffrey Immelt Is Good for America
Obama Teams Up With G.E.

When Democrats said President Obama was “pro-business,” we didn’t know they meant one business in particular…

It is unclear how the administration plans to deal with the ethics challenges created by having a CEO whose income is determined by stock performance leading a panel designed to recommend government policies. G.E. (2009 revenue: $157 billion) is a huge government contractor and is always in the market for new subsidies and incentives.

Putting such decisions in the hands of bureaucrats is a sure recipe for corruption. They can practice it openly, and even be praised for it. It’s to create jobs; It’s for the environment; It’s for national security; It’s for the children.

That’s actually the most evil part, far worse than the actual dollars being wasted. It habituates taxpayers to… well Tocqueville said it best:

After having thus successively taken each member of the community in its powerful grasp and fashioned him at will, the supreme power then extends its arm over the whole community. It covers the surface of society with a network of small complicated rules, minute and uniform, through which the most original minds and the most energetic characters cannot penetrate, to rise above the crowd. The will of man is not shattered, but softened, bent, and guided; men are seldom forced by it to act, but they are constantly restrained from acting. Such a power does not destroy, but it prevents existence; it does not tyrannize, but it compresses, enervates, extinguishes, and stupefies a people, till each nation is reduced to nothing better than a flock of timid and industrious animals, of which the government is the shepherd.

Administrative despotism – EPA, HHS, TSA, FCC, FRS, FDA, FERC and most certainly Immelt’s Council on Jobs and Competitiveness – is a greater threat to liberty than merely seizing our treasure and wasting it. Administrative despotism blames its failures on the supposed greed, parsimony and lack of compassion of capitalism and the free market, providing a ready list of red herrings and straw men for our Presidents, Governors, Senators, et. al..

It is often argued that with the right, and upright, people in charge these hazards can be avoided. Even if we accept that, and I do not, those “upright people” are complicit in preserving a legacy of corruption and misuse of power. That legacy is not as old as you might think it is, as this Heritage paper points out.

Other TOC commentary on corporatism can be found been here.

Update: 4:45PM
He Certainly Knows How to Cut Jobs…

GE finished 2009 with 18,000 fewer US workers than it had at the end of 2008, and US headcount is down 31,000 since Immelt’s first full year in 2002. During his [Immelt’s] tenure, GE workers based in the US as a percentage of total employees has fallen to 44% from 52%.

Naive hubris

Greg Main, the retiring head of the MEDC looks back on his accomplishments. This is his second term (his first stint was in the 1980s) as Michigan’s chief economic planner, and it appears he has learned little from the experiences.

“When I came back (in 2009), it was apparent that there was a good plan in place (at the MEDC) already,” Main said. “It is just a matter of executing it.”

…”It became real clear to me that it was one thing to create plans, and another thing to get them implemented,” Main said.

Well, yes, it is. Unfortunately, the plan executed during his second term is not what rational people would describe as “good.” So it is just as well it was not easy to do. In any case, no government has ever successfully executed an activist economic plan, so Main is not to be faulted for that failure. Only for the attempt, and continuing faith in it. (Note: the LSJ seems to have disappeared this next part in the online version. It was there this morning, online and in print.)

The strategies are paying off, Main said. Since he came to the MEDC, the state has captured six new manufacturing plants for advanced battery technologies.

“We are going to be the epicenter of that industry, and it didn’t even exist in the U.S. two years ago,” Main said.

Manufacturers of products needed by the solar and wind energy industries also have invested in Michigan.

Other campaigns and incentives – such as a tax credit for filmmakers who hire state residents and film in Michigan, and the state’s Pure Michigan travel ads – have elevated the state’s profile.

Windmill manufacture, battery plants that will be obsolete before they are fully operational, solar panel subsidies for India, and movie subsides(!)? Since he didn’t mention it, I guess ethanol was before his time.

This all makes me even more nervous about Rick Snyder, first head of MEDC, and his “public/private partnership” “plans.” If the “plan” requires public funding because private capital sees it as too risky, then it probably is too risky. Maybe a good test would be whether Union pension plans would provide the venture capital – with a no bailout clause.

This fascination with mini-Manhattan Projects needs to cease.

Fiddling on the edges of Statism

State Senate Finance Committee Chair Nancy Cassis (R-Novi) says, “Legislation needed to address MEGA audit findings” 

MEGA is the Michigan Economic Growth Authority, a wholly owned subsidiary of the Michigan Economic Development Corporation (MEDC).  The Senator is concerned because:

A major finding by the state auditors was that the strategic fund’s procedures were not sufficient to validate the summary information detailing job claim and wage data maintained by the companies. Auditors reported 10 of 15 of those sampled, or 67 percent, of companies failed to submit all requested information needed to verify the data for the tax credit and often relied on self-reporting for new jobs and payroll figures.

Inadequate procedures? That’s what needs to be corrected? I don’t think so. MEGA doesn’t need new legislation and MEDC doesn’t need reform. They need to be eliminated.

I am extremely concerned about the impression of MEDC inflating job creation numbers in press releases, especially with the strategic fund’s failure to verify job and wage numbers before giving out a number of refundable tax credits. These actions over time could significantly erode the public’s trust and result in an inability to measure the program’s effectiveness to create jobs.

It’s maddening that Senator Cassis accepts the idea that the State of Michigan should be picking economic winners and losers. It’s laughable she’s focused on “measuring the program’s effectiveness to create jobs,” when, in fact, no government agency has ever done so. 

Sadly, her views accord with those of GOP gubernatorial candidate Rick Snyder, who is calling for MEDC “reform.” It’s worth noting Snyder was MEDC’s first Director, and after leaving that position was himself a beneficiary of $7.5 million in MEDC funds.  

The GOP message? If the right people are in charge, corporatism is a good idea.  Vote for us, we can do a better job of managing the corporate welfare state.