This Time It Will Work

Writing in the Washington Examiner, Tim Carney gets to the heart of the matter:

The problem is not that Obama's administration is bad at picking investments. Nor is Obama, among politicians, corrupt or unusually given to cronyism. The problem is that Obama's stated agenda, which involves giving government a central role in the private sector, inevitably creates waste, gives benefits to the well-connected, and opens the door for cronyism and corruption.

Obama promised to be the scourge of the lobbyists and the antidote to special-interest dominance in Washington, but he also promised an activist government role in the economy. The two are nearly mutually exclusive.

Actually, I think Obama is quite bad at picking investments, but we'll leave that aside. Carney's larger point is crucial — the incentive for corruption is baked into public/private initiatives. As a general rule, those nasty venture capitalists don't bother with anything that doesn't provide a good possibility of a return on investment. And further, venture capitalists generally fund companies that plan to compete in the existing market. Governments often are less interested in a return on investment than on ameliorating social ills.

It's instructive that one of the primary initiatives of the Left in recent years has been cap and trade, in which the government bid fair to create a marketplace that didn't exist. Carbon credits are a wholly artificial construct and the credits only would have had value to the extent that the government could create and operate a regulatory apparatus that controlled most financial activity. It would have taken a hell of a lot of enforcement to make it work, too.

The response comes back -- what about the hedge fund managers and the arbitrageurs who have spent the last few decades trashing the economy? Didn't they steal billions, maybe trillions, by gaming the system?

Yes, they did. And they did because they were able to figure out ways around the artificial constructs that the regulatory state attempted to impose, mostly with the ideal of making the housing market more "fair."

Are you ready to double down on all that? Then by all means, let's have more stimulus, more government-run job creation, more picking of winners and losers, with more funding out of the public fisc. Let's see if it works any differently than it did before. It's going to be brilliant this time, right? You have to break a few Solyndras to make an omelette, right?