Thursday, July 15, 2010

Worst Except for All the Alternatives

Noticed all the stories the last two years about the failures of capitalism, corporations and their despised CEOs to plan and execute wisely in the allocation of funds to develop a robust economy? Heard the text or subtext that calls instead for government regulation, government-directed investment, and government economic planning?

Well, here's a story to chew on. BHO has since his inauguration continually beaten the drum for the development of American manufacturing of batteries for the soon-to-explode electric automobile market and related "green" technologies.

The CEO of America is at it again today, flying to idyllic Holland, Michigan (where of late other significant, noneconomic activity has been afoot) to promote the federally subsidized factory presently under construction to manufacture new generation batteries.

But as WaPo dutifully reports, Uncle Sugar's $2.4 billion invested in boosting American manufacturing capacity of this favored item is likely to go underutilized. The capacity presently under construction will equal 40% of global demand, per BHO's pronouncements. Menawhile, Menahem Anderman, founder and chief executive of Total Battery Consulting, estimates that by 2015 US production will equal less than 10% of global demand, thanks to the fact that five Japanese and two Korean companies have a five-year head start on the technology.

Remember when the Soviet Union turned out heavy machinery in quantum quantities, only to see it waste while consumers lined up for a shot at procuring the miserable consumer goods that existed in such short supply? Remember when subsidies of the American dairy industry produced mass giveaways of 16-ounce blocks of processed cheese food?

So coming soon to a location near you: lithium-ion battery giveaways, followed by battery junkyards where unwanted cells weather away across the millennia.

Accusing capitalists of making mistakes is like accusing living things of breathing. That's what they do. But the key difference between free-market mistakes and centralized-planning mistakes is that in the former case, the mistakes can self correct, while in the latter case they endure forever. For every move on the free market, someone is likely making an opposite move. For every excess of the conventional wisdom, some contrarian is going the opposite way to soften the blow. Bad ideas die much more quickly when they aren't subsidized.

As is so often the case, Adam Smith got it right the first time. But each generation seems destined to attempt to prove that it is the exception, thereby proving the rule.

4 comments:

JB in CA said...

"Uncle Sugar's $2.4 invested in boosting American manufacturing capacity of this favored item is likely to go underutilized."

You are becoming a penny pincher. I thought you'd be happy to see the government limit its investment to 2.4 dollars.

Jon A. Alfred E. Michael J. Wile E. SWNID said...

A mistake of nine orders of magnitude, now corrected, and more easily corrected than the government's mistake in making this awful "investment."

Bryan D said...

Socialists are like the proverbial toddler who, upon finding that he cannot fit the square peg in the circular hole, attempts to resolve the situation by doing the same thing *harder*

Jon A. Alfred E. Michael J. Wile E. SWNID said...

Or the more sophisticated toddler who believes that she or he belongs to a very special class that can by the power of collective enlightenment do what has never been done before with peg and hole.