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Saturday, November 16, 2013

When Governments Try to Create Markets

It always ends in failure.
When the government decides there is not enough of something and gets involved in its manufacturer, sale and distribution, what soon will follow is Waste, Financial Loss and Corruption.
Example #1: Ethanol

George W. Bush, that Leftist spendthrift in a Republican cloth coat, decides to boost the agricultural industry by requiring the combustible derivative of corn, Ethanol, be a part of ALL gasoline sold in the United States. What a great idea! First the farmers will have a market for their corn since now we HAVE to have a percentage of corn squeezin’s in the nation’s gas tanks. It’s a Biofuel so it will be good for the environment, right?
Well the problem with corn as a crop is that it beats the crap out of the soil and requires intensive fertilization and attention. It’s not a cheap crop to grow. But the government is driving the bus on this industry and so set a very good price for what it will pay for Ethanol. It’s a higher price than the market would pay otherwise. But what the hey, it’s not THEIR money the good Senators and Representatives are playing with, it’s TAXPAYER money and who knows better than Congress about what to do with THAT when there are votes to buy from the Biofuels lobby, the Agribusiness lobby and the Environmentalist lobby even though NONE of them would ever think of voting for a candidate with an “R” by their name BUT they will gladly take the money. Thanks George!

So what happens? The Corn Boom literally caused an environmental disaster!
The fertilizer and insecticide run off from all the land that was thrown over to corn production has been killing our waterways. Land that was not a profitable environment for farming now becomes fields of corn.  If you are a farmer, what now becomes your motivation? “Why am I growing wheat when the government is paying so much for corn? Why am I dealing with dairy cows when the government is paying top dollar for corn?” etc.
Corn is now grown on over 400,000 farms across the nation making the U.S. the number one corn producing country in the world.
But is the nation any cleaner?  That’s a NO. Has the economy been improved by this government intervention in the marketplace? Again that’s a NO. Most of us don’t get to witness the areas of destruction that happens in the nation’s bread basket, and we don’t know what goes on when areas of an industry are never created. We just see the price go up on a gallon of milk or on a loaf of bread but we don’t know why.  Well, this is why.
Example #2: Clean Energy

When there is the Alternate Energy industry. This is an industry with more good intentions than demand behind it. There are many people who like the idea of using solar power and wind energy and in some places it is very practical like the “Cabin in the Clouds” on top of the windiest place on Earth, New Hampshire’s Mount Washington, where solar and wind power is the only source of electricity. But mostly solar and wind power has been a cottage industry since the solar panels, wind turbines and especially the batteries are expensive, providing the user with no monetary savings and the manufacturer with little or no profit.
Enter the U.S. Government!
With its subsidies, tax breaks and outright massive loans to their friends and lobbyists, the Federal government has injected heaping wads o’ taxpayer cash into this industry which have erected big manufacturers of solar panels, wind turbines and high-stress batteries almost overnight. And almost as quickly these manufactures are tanking, filing for bankruptcy protection and taking all that “investment” money with them. You’d think it was the 2007 housing crash all over again. 

By forcing automobile manufacturers to make electric cars that NOBODY wants and that can’t function to an enth of the ability of an internal combustion engine, the government has attempted yet again to make a market where none existed.
Who wants a car that has a range of less than 100 miles per charge, takes hours to replenish that charge, has a very expensive and highly toxic battery which is fully 1/3 the cost of the entire automobile, and even with massive subsidies still costs $40,000.00?  I'll take a show of hands...anybody?
And if you live in New England or worse, the Midwest, where it’s snowy, blowy and friggin' cold all Winter, the range is reduced dramatically by a force no government can legislate, PHYSICS! Batteries just don't perform well in cold weather.
Then there is that little problem of electric cars BURSTING INTO FLAMES.  No problem, we’ll fix that issue eventually, hop in!

This massive “Pay for Influence” racket is a gamble governments make to try to stay in power. Other industries that could have used that money, profitable industries, never got to see it because it was siphoned away from the buying public in taxes and then squandered on a useless commodity that people wouldn’t buy on their own. This is the insidiousness of government intervention in the marketplace.
This also causes a slippery slope for Government since once the effects of their bad policy become evident; there is no stepping back because the groups whose pockets they’ve lined with money now become the enemy, vowing to fight to keep their favors. Even if they do try to pull out of the mess they've made, the markets will be affected by the sudden pullout of funds. Corn prices would plumet to it's actual market rate and corn farmers take the hit until the market can regain it's natural balance.

Another clear example would be the current QUANTITATIVE EASING being applied by the Federal Reserve. If they should suddenly stop buying those Billions of dollars of bonds each month, the Stock Market, being dependent on that ready cash, will have a deep adverse reaction in the short term.  It's quite a hole the Federal Reserve has dug for the financial markets since even the mear talk of backing off their bond buying program shows up on Wall Street's leader board. And to think these guys went to school for this.

Example #3: The Electric Automobile

Yet another example of the government's attempt to create a market where one does not exist.

The "new" electric car is falling short of expectations. Expensive to make, expensive to buy and maintain, they can't compete with the efficiency and reliability of the gasoline engine. If the electric car was a good idea, it would have already been a mainstay in the marketplace already and not a government subsidized novelty item.

Perhaps most people don't realize that the electric automobile has a long history in the U.S. and at the trun of the last centry once competed with the gasoline engine on the open market...and lost.

Since the early 1900s the electric car hasn't really gotten any more efficient. Its range, weight and unpredicatbility in cold weather have not changed much in over 100 years. 

The electric cars biggest enemy is Physics. It doesn't operate well in cold weather and just where do you suppose all this electricity to run them comes from, electric powered power plants? Nope! It's Coal that drives this electric bus!

Electric automobiles have always been a Fad and had we put as much resources into developing a more efficient gasoline engine, Billions of dollars I might add, we coudl well have been seeing gas engines that get 100 miles to a gallon of gas by now.
But we don't get to see what does not get to happen.

The only way the electric car will catch on is if that was the only thing out there for the public to buy. Sorta like the old Soviet "that's all you're going to get" approach to marketing.

Which leads me to the last example...

Example #4 The Mercury Light Bulb

The incandecent light bulb has been outlawed by the U.S. government. If light bulbs are outlawed, only outlaws will have light bulbs. Actually they didn't ban them outright, they only placed a mandate that they reach an efficiency that they cannot reach.

But the result is the same. You will not be able to buy an incandecent light bulb. What you CAN get is the grossly unatractive and somewhat toxic Mercury light bulb. Yes, there is Mercury in them and so you are not really supposed to just throw them away. They should be disposed of in an environmentally safe manner. How's that for convenience? We all know that this is not going to happen.

But the main point is that government once again attempts to make us take a lesser product that has not proven to be popular and isn't even a good source of light.


This is for all those who still actually believe that Government is the answer to the nation’s problems. This is for people who think the government just has to “pass a law” and it will make things right. This is for people who think that FORCE in necessary to make people to comply with an arbitrary law. You can plainly see that these efforts always end in failure since solving problems is not what motivates government anymore.
Government creates problems it then tries to solve by more government and in the words of that great cartoon character, Rocket J. Squirrel from the Rocky & Bullwinkle Show; “But Bullwinkle, THAT trick NEVER works!”

A government subsidy or assistance may make you happy today but it will only lead to tears tomorrow. Depend on government if you want to cry and if you want to beg. Depend on yourself if you want to prosper and move forward and become a free person.
Recognize that today’s short-money handout is tomorrow’s dependency and a path to servitude. If you think that today you will take it so that your children will break out in the future, you are mistaken. If you as a parent don’t break out now, where will the example be set?

Fight for you human dignity. Fight for your right to grow and to learn from mistakes.
Start today.

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