From Scott DeLong:
Public Private Partnerships are Socialism
What do Harford County Government, Maryland State Government, and Obama Administration have in common? They are enthralled with the idea of risking taxpayers dollars in socialist ventures called “Public/Private Partnerships”.
PPP’s have been around a long time, taking taxpayer dollars and using them to advance the goals of politicians and their politically-connected friends. Astute readers call it Mercantilism and Crony Capitalism. The “politically correct” term is Public/Private Partnership.
Locally, the Harford County Council recently approved, at the request of the County Executive David Craig, the authority to engage in “Angel Investing” where taxpayer money will be put at risk to invest in high-risk business ideas. Under Bill 12-19 passed by the Council 4/17/12, the Craig Administration is authorized to award “loans” of as much as $50,000 without authorization by the Council. The County Council can authorize awards of up to $200,000 of taxpayer to preferred businesses. Amazingly, the terms, rates & security of the loans are set by the County Executive!
The venture capital business is highly risky. It is also highly lucrative for the venture capitalist when they are successful. Good ideas have plenty of private suitors looking for a potential profit. If the inventor of the next Apple or Facebook is in Harford she or he will not need government financing.
Neither the County Council nor the County Executive have the requisite background in venture capital banking & finance to successfully pick winners & losers. If they do, then perhaps they should leave the safe confines of county government for the lucrative venture capital business….with their own money.
Knowing that the government is the backstop to losses, the “private” investors will not make efficient investment decisions. The road is littered with the wreckage of failed PPP’s like Fannie Mae, Freddie Mac, Solyndra & Ener1. In Harford we have TIF’s & the Ripken Stadium just to name a few. The danger of PPP’s is they give a company access to capital, land, labor which it would not have access without government intervention. We must ask ourselves, are PPP’s & “Angel Funds” a proper role of government? Or can the private sector do it more efficiently & effectively?
Public Private Partnerships are not the free-market at work. There is nothing free about it. They result in the misallocation of capital, fad spending & a crowding out private capital for private projects. When PPP’s fail the losses are socialized & “capitalism is blamed. When the occasional gain occurs the profits are privatized & big government is credited…and justified. Since all markets are interconnected, the free market economy is thus distorted.
Ultimately, Citizens become the unwilling clients of the government and active participants in wealth redistribution. Jefferson said, “To compel a man to furnish funds for the propagation of ideas he disbelieves and abhors is sinful and tyrannical”.
Remember this– when the politicians all agree that something is “good for you”, hold on to your wallet. The government bureaucrat & the private business have allied to fleece you.
Governments do not create prosperity; free minds, free markets & free people do
Bel Air, MD