Crony Capitalism

Andrew Cuomo's Corporate Welfare

The New York governor tries his hand at crony capitalism.

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Which high-tech material will be the silicon of the future: silicon carbide, gallium nitride, or some other substance yet to be discovered?

No one knows for sure. But Governor Andrew Cuomo just bet $135 million of New York taxpayer dollars on backing GE's silicon carbide manufacturing efforts and IBM's gallium nitride efforts.

Cuomo's bet, on manufacturing facilities in Albany and Rochester, comes months after President Obama announced a $70 million federal Department of Energy grant to a similar program based in North Carolina, with the involvement of the light-bulb company Cree and the tractor manufacturer John Deere.

Which raises the question: if this technology is so terrific, why can't the private sector do the research and development on it without extra funding from taxpayers?

Part of the answer may be that the productivity gains from the technology are incremental rather than exponential. A GE report on silicon carbide touts that the material "could" improve the efficiency of wind and solar farms "by more than one percent."

The other part of the answer is that the companies are able to find politicians, like President Obama and Governor Cuomo, who are willing to put public funds on the line. For the politicians, the danger is that the investment will result in a well-publicized failure, like the Obama administration's investment in Solyndra, the solar energy company that went bankrupt. But in a lot of cases, the politicians will be out of office and on to other things before success or failure becomes obvious.

There is the chance that the politicians might be embarrassed by appearing to provide favors for campaign contributors. Unfortunately, however, while the press editorializes in favor of campaign finance "reform" and obsesses over the influence of the Koch brothers, when it comes to an actual government expenditure benefiting a company that is a significant campaign contributor, there is a remarkable lack of curiosity.

New York has one of the most competitive and robust press corps in the world. But so far as I can tell, not a single article about Governor Cuomo's announcement until the one you are reading now has mentioned that GE gave $30,000 on November 12, 2013 to the New York State Democratic Committee's "housekeeping" account, $30,000 on December 6 to the same account, and another $30,000 on May 1, 2014 to the same account. That's $90,000 to the state Democratic Committee in less than seven months, shortly before the state's Democratic governor announces a plan to subsidize a new silicon carbide factory for GE in Albany. Where's the New York Times editorial decrying corporate campaign contributions?

I am not suggesting that Governor Cuomo agreed to the subsidy because of the campaign contributions. And I believe that if the people who own a corporation want to participate in the political process by making campaign contributions in the name of the corporation, they should be able to. But all that said, one reason to avoid big government handouts to private companies is that they breed justifiable public cynicism about corruption, and whether the little guy who doesn't donate will get the same benefits as a giant like GE.

New York says its facilities will benefit not only GE and IBM but a long list of smaller and less well-known companies. Maybe so. But there's an even longer list of individuals and smaller and less-well known companies in un-subsidized industries who are being taxed to support the beneficiaries of Governor Cuomo's and President Obama's largesse.

If Obama and Cuomo want to be high-technology investors, there are plenty of well-paid opportunities awaiting them in the private sector following their stints in public service. Right now, they are investing while in office, using money that we taxpayers could be investing better on our own. If I want to invest in GE or Cree or IBM or John Deere, I'd rather do it through a stockbroker than through President Obama or Governor Cuomo. America and New York have enough problems to solve without the president and the governor taking on side jobs as high-tech speculators.

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  1. A GE report on silicon carbide touts that the material “could” improve the efficiency of wind and solar farms “by more than one percent.”

    Who could pass up an investment opportunity like that, though? Possibly an entire percentage point of efficiency! That might help cut carbon emissions .000001%! That could be the very amount that saves the planet!

    1. Did you catch that Bjorn guy’s Reason talk? Check out 31:44 of this video

      https://reason.com/reasontv/201…..75-billion

      Fracking tech has caused so many people to switch from coal to gas (which emits 1/2 the co2) that it has reduced the US’s co2 emissions by about 300 megatons. The combination of every solar panel and wind turbine on the planet is estimated to reduce the world’s emissions by about 275 megatons

      1. Yea, but Matt Damon made a movie about how evil fracking is.

        1. Yea, but Matt Damon made a movie about how evil fracking is.
          …and Matt got part of the investment money from an oil company. Go figure!

  2. “Unfortunately, however, while the press editorializes in favor of campaign finance “reform” and obsesses over the influence of the Koch brothers, when it comes to an actual government expenditure benefiting a company that is a significant campaign contributor, there is a remarkable lack of curiosity.”

    People mentally avoid facing things they don’t like. And they do so without a bit of cognitive dissonance as they berate others for the same things. People everywhere of every belief do this in some form or another, some more than others, some less.

    Real question is, how to get people to see it, and – the real hard part – get them to admit it, and – now the impossible part – be interested in more loyalty to objectiveness.

    The above also outlines why the big-L candidates don’t seem to catch on.

    1. They give themselves a pass because politicians are elected. Therefore, they twist and turn until they believe that there’s probably *something* decent and good about everything politicians do.

      You might call it a democracy fetish.

      However, no one voted for the Koch brothers, so that makes everything they do corrupt, never mind what it actually is that they do

      1. Wrong. In fact millions of customers “vote” for the Koch brothers everyday when then buy their products and services.

  3. This pious little whop is just as greasy and odorous of garlic like his worthless father.

    Be it Bushes, Kennedys or this pair, this legacy trash does not speak well of our intelligence.

  4. Stop saying “crony capitalism.” There’s no such thing. It’s an oxymoron, like “promiscuous virginity” or “drunken sobriety.” You can have cronyism OR you can have capitalism, but you can never have both at the same time.

    When you use the term “crony capitalism,” all you are doing is giving credence to the left’s slander of capitalism by conceding that cronyism is just a variety of it. This needs to stop, and it needs to stop now.

    1. How about crony socialism?

      1. Just cronyism will do just fine.

    2. Well, they call it crony capitalism because the company is investing their money in politics because that has the highest rate of return on dollars spent. In just this case the company return is $1500 for every $1 spent. The company would be quickly out of business if they did not make that sort of obvious investment.

  5. New York has one of the most competitive and robust press corps in the world

    How were you able to write that without bursting out laughing? There is a complete lack of investigative instinct or diversity of thought, so while there may be legion of press drones, they are neither robust nor compeditive.

  6. They are cowardly, biased, and dishonest. The NY a Times being perhaps the greatest example.

  7. Who can forget the day when steely-eyed New Yorkers forgave Cuomo his pivotal role in the housing collapse and rushed him into the governor’s mansion in 2010?

    Voters elected him for his penchant for cronyism under the assumption that they’d get a bigger handout than they’d give. Of course he’s going to throw money at IBM and GE; that’s who he has always been.

  8. I am not suggesting that Governor Cuomo agreed to the subsidy because of the campaign contributions.

    Well if you won’t, I sure as hell will. This is a straight-up bribe.

    -jcr

  9. While this does point out the hypocrisy in the democrats, it doesn’t mention a solution. What exactly is the libertarian answer to political cronyism? The democrats would say that we need to ban certain types of campaign contributions, while the republicans, well the republicans don’t really say much about it.

    The supreme court has held that companies and individuals are allowed to contribute to anyone’s political campaign that they like, but why not go the other way and say “sure you can contribute, but that disqualifies you from receiving government grants or contracts.” That way Joe the plumber can give any money he wants to political candidates, but he wont be hired to unclog the sinks at the white house anytime soon.

    1. No, the solution is to not let the government have the power in the first place. That’s the way the country was set up to start, with enumerated powers and all. Sadly, we’ve drifted far afield and now that which is not explicitly prohibited to the gov is permitted.

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