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So policymakers have wrecked traditional capital markets through regulations on raising capital, interest rate distortions, twisted tax policy, patent law abuse

So policymakers have wrecked traditional capital markets through regulations on raising capital, interest rate distortions, twisted tax policy, patent law abuse, and anti-hiring labor policy, and now they are going to "fix" VC markets for us. Thanks. The feds can't even protect the border or catch Osama bin Laden and now they want to run some fascist incubator to give the political class even greater control over our society. This is the first step of course. As the program grows, Congress will start creating demands like set-asides for racial groups or veterans, and it will just so happen that a phone call from a politician will seal the deal.

_pius 16y ago
... now they want to run some fascist incubator ... Are you seriously calling this fascism?
- watchandwait 16y ago
  From Wikipedia: "An inherent aspect of fascist economies was economic dirigisme, meaning an economy where the government exerts strong directive influence, and effectively controls production and allocation of resources. In general, apart from the nationalizations of some industries, fascist economies were based on private property and private initiative, but these were contingent upon service to the state."
  - silverbax88 16y ago
    Not to be flippant, but 'strong directive influence' and 'contingent upon service to the state' for the entire economy is a far cry from a tiny fund of money.
    - nika 16y ago
      The fund only backs businesses "contingent upon service to the state". Literally it is in the fact sheet that his money will go to "disadvantaged" (eg: politically connected businesses that can be counted on for electioneering) and to "clean energy", which is a category of businesses serving the political agenda. At the next election, Obama can talk about how he gave $2B to politically correct businesses (though he won't use that term) and he'll have lots of "high tech" plants to tour where he can say "they said we couldn't, but I say we can, and we did, build this company! Making clean energy solar cells for the future!" That's "contingent upon service to the state". He didn't say the "entire economy" was fascist, just that the fund was.
- yoyar 16y ago
  Let's call if corporatism. It means the same thing but people will whine less about the semantics.
  - watchandwait 16y ago
    Fair enough, fascism also has non-economic context and that's not the point I was making.
  - jbooth 16y ago
    But it's not corporatism or fascism, or socialism, it's a frickin seed program that may be a small waste of money. The government funds basic research all the time, with a pretty good track record. Fascism is telling Volkswagen to make tanks.
    - anamax 16y ago
      > The government funds basic research all the time, with a pretty good track record. Maybe, but this isn't basic research. > Fascism is telling Volkswagen to make tanks. This is saying "we'll fund {you} to make {whatever}" when folks spending their own money don't believe in the combination of {you} and {whatever}. Synfuels anyone? Which reminds me, what fraction of the US govt-seeded/assisted solar biz haven't moved much of their operations to China? The decision will be made on a political basis. That's how govt always works.
      - jbooth 16y ago
        Good god, man, you can't be defending this tripe. Fascism has a definition, and it involves getting all of the biggest corporations on the same page with the government to create a totalitarian state. (Communism differs in that the government is the whole deal). We've been funding energy research for decades, and there are a lot of reasons for the government to try and kickstart green energy. This is an experiment with the funding mechanism, people complain about the grant system all the time, silicon valley works, so someone said hey let's give this a shot. It's not fucking fascism. If it was under the DARPA line item would you be more ok with it?
- deleted 16y ago
  [deleted]
nika 16y ago
When this was first announced a couple weeks ago, I read the "fact sheet" posted. In it they talked about an emphasis on putting the money into "disadvantaged areas" and "focusing on innovative technologies like clean energy". So, your concern about investments being made more based on political pull than on merit is well founded. Over 50 years ago an environment of heavy government regulation and anti-competitive legislation (as you describe in the first part of your post) was posited by Ayn Rand in Atlas Shrugged. The argument being that it is in politicians interest to make business hard so that businesses are beholden to politicians. She called it the "aristocracy of pull". I like to point out that taking $2B out of the economy will prevent the creation of- in my estimation- 4,000,000 jobs over the next 10 years. The money must come from taxes or inflation, and that lowers the bottom line at the end of the year when business owners large and small are deciding whether to expand or not. The lack of expansion in the first year means the businesses lose out on the profits that would have come from it on the second year, and like compound growth the missed opportunity compounds as well. Better to let people allocate their own resources and capital. Central planning doesn't work, and inevitably leads to the aristocracy of pull.
- nkassis 16y ago
  "The money must come from taxes or inflation," that's not how gov economics work. You borrow that money, hence you only pay the interest (until you can't). Now this model can be sustained as long as the economy grows faster than the interest you have to pay. This is why deficits spending isn't in itself that bad, it's the size of the deficit that's the issue. (probably oversimplified the whole issue but that's what I got from second semester of macroecon)
  - sskates 16y ago
    Sorry, the government can't create wealth for free. If the government wants to allocate dollars, it must at some point come from taxes (pulling dollars in the economy back out of it) or inflation (printing more dollars and decreasing the value currently held dollars). Now, the economy may grow such that the amount of wealth in the future is much larger than the amount we have now, and therefore represents a smaller fraction of the economy, but the fact remains that the wealth comes from somewhere.
ijuyhgtfrgth 16y ago
Yes it will distort the startup market slightly - but the people creating startups are smarter than the government! We started a company in "a special development area" = 30 years of high unemployment since the shipyards closed and a civil war didn't help. Every government department was queuing up to give money to create new entrepreneurial industries. Department 'A' required you to have less than 5 employees - no problem you just count the founders. Then Dept 'B' had a grant if you had created 10 jobs - no problem you just count every web designer and contractor. Dept 'C" gave you money if you worked in a green technology - no problem you just sign up another startup doing green stuff as a customer and do some work on their website. It actually did a fantastic job of creating an unofficial network of startups who all borrowed staff off each other and discussed the latest tricks to get the latest grant. Still cost less than having the army on the street,
- nika 16y ago
  So, you're arguing against someone claiming that people will game the system by talking about how people gamed a similar system?

_pius 16y ago

... now they want to run some fascist incubator ... Are you seriously calling this fascism?

watchandwait 16y ago
From Wikipedia: "An inherent aspect of fascist economies was economic dirigisme, meaning an economy where the government exerts strong directive influence, and effectively controls production and allocation of resources. In general, apart from the nationalizations of some industries, fascist economies were based on private property and private initiative, but these were contingent upon service to the state."
- silverbax88 16y ago
  Not to be flippant, but 'strong directive influence' and 'contingent upon service to the state' for the entire economy is a far cry from a tiny fund of money.
  - nika 16y ago
    The fund only backs businesses "contingent upon service to the state". Literally it is in the fact sheet that his money will go to "disadvantaged" (eg: politically connected businesses that can be counted on for electioneering) and to "clean energy", which is a category of businesses serving the political agenda. At the next election, Obama can talk about how he gave $2B to politically correct businesses (though he won't use that term) and he'll have lots of "high tech" plants to tour where he can say "they said we couldn't, but I say we can, and we did, build this company! Making clean energy solar cells for the future!" That's "contingent upon service to the state". He didn't say the "entire economy" was fascist, just that the fund was.
yoyar 16y ago
Let's call if corporatism. It means the same thing but people will whine less about the semantics.
- watchandwait 16y ago
  Fair enough, fascism also has non-economic context and that's not the point I was making.
- jbooth 16y ago
  But it's not corporatism or fascism, or socialism, it's a frickin seed program that may be a small waste of money. The government funds basic research all the time, with a pretty good track record. Fascism is telling Volkswagen to make tanks.
  - anamax 16y ago
    > The government funds basic research all the time, with a pretty good track record. Maybe, but this isn't basic research. > Fascism is telling Volkswagen to make tanks. This is saying "we'll fund {you} to make {whatever}" when folks spending their own money don't believe in the combination of {you} and {whatever}. Synfuels anyone? Which reminds me, what fraction of the US govt-seeded/assisted solar biz haven't moved much of their operations to China? The decision will be made on a political basis. That's how govt always works.
    - jbooth 16y ago
      Good god, man, you can't be defending this tripe. Fascism has a definition, and it involves getting all of the biggest corporations on the same page with the government to create a totalitarian state. (Communism differs in that the government is the whole deal). We've been funding energy research for decades, and there are a lot of reasons for the government to try and kickstart green energy. This is an experiment with the funding mechanism, people complain about the grant system all the time, silicon valley works, so someone said hey let's give this a shot. It's not fucking fascism. If it was under the DARPA line item would you be more ok with it?
deleted 16y ago
[deleted]

nika 16y ago

When this was first announced a couple weeks ago, I read the "fact sheet" posted. In it they talked about an emphasis on putting the money into "disadvantaged areas" and "focusing on innovative technologies like clean energy". So, your concern about investments being made more based on political pull than on merit is well founded. Over 50 years ago an environment of heavy government regulation and anti-competitive legislation (as you describe in the first part of your post) was posited by Ayn Rand in Atlas Shrugged. The argument being that it is in politicians interest to make business hard so that businesses are beholden to politicians. She called it the "aristocracy of pull". I like to point out that taking $2B out of the economy will prevent the creation of- in my estimation- 4,000,000 jobs over the next 10 years. The money must come from taxes or inflation, and that lowers the bottom line at the end of the year when business owners large and small are deciding whether to expand or not. The lack of expansion in the first year means the businesses lose out on the profits that would have come from it on the second year, and like compound growth the missed opportunity compounds as well. Better to let people allocate their own resources and capital. Central planning doesn't work, and inevitably leads to the aristocracy of pull.

nkassis 16y ago
"The money must come from taxes or inflation," that's not how gov economics work. You borrow that money, hence you only pay the interest (until you can't). Now this model can be sustained as long as the economy grows faster than the interest you have to pay. This is why deficits spending isn't in itself that bad, it's the size of the deficit that's the issue. (probably oversimplified the whole issue but that's what I got from second semester of macroecon)
- sskates 16y ago
  Sorry, the government can't create wealth for free. If the government wants to allocate dollars, it must at some point come from taxes (pulling dollars in the economy back out of it) or inflation (printing more dollars and decreasing the value currently held dollars). Now, the economy may grow such that the amount of wealth in the future is much larger than the amount we have now, and therefore represents a smaller fraction of the economy, but the fact remains that the wealth comes from somewhere.

ijuyhgtfrgth 16y ago

Yes it will distort the startup market slightly - but the people creating startups are smarter than the government! We started a company in "a special development area" = 30 years of high unemployment since the shipyards closed and a civil war didn't help. Every government department was queuing up to give money to create new entrepreneurial industries. Department 'A' required you to have less than 5 employees - no problem you just count the founders. Then Dept 'B' had a grant if you had created 10 jobs - no problem you just count every web designer and contractor. Dept 'C" gave you money if you worked in a green technology - no problem you just sign up another startup doing green stuff as a customer and do some work on their website. It actually did a fantastic job of creating an unofficial network of startups who all borrowed staff off each other and discussed the latest tricks to get the latest grant. Still cost less than having the army on the street,

nika 16y ago
So, you're arguing against someone claiming that people will game the system by talking about how people gamed a similar system?