After the federal government showered Chrysler with $7 billion in 2009, this foreign-owned crony capitalist enterprise needs a new factory. Thus it is now time for Ohio taxpayers to come up with $400 million (Wall Street Journal) for gas-guzzling 4WD Jeeps. One advantage of Gosplan was that they provided written five-year plans explaining the rationale for their allocation of society’s resources. Would it be asking too much to see the plan where wise officials decided that this was the best use of $400 million?
[I’m leaving out the $1.5 billion bailout during the Jimmy Carter years, which translates to about $5 billion in today’s mini-dollars. Note that the article covers a $750 million hand-out from New York taxpayers to SolarCity (perhaps the government-provided cash should be conditional on the company renaming itself “Solyndra“).]
Too bad that Gandhi isn’t around to answer the question “What do you think of American free-market capitalism?” with “I think it would be a good idea.”
It appears as if the details (such as the amount of rent that will be charged) have not been nailed down yet in Toledo, so it’s hard to say whether or not this would be a good deal for the city. Ideally, governments would stay out of transactions like this altogether and leave capital allocation to banks, etc. But second best is for government to operate as a business and do deals that have a good prospect of repayment and even making a profit (or at least not losing a ton of $). Also , keep in mind that (even if the plant building deal itself is somewhat money losing), state and local governments gain revenue from payroll taxes, sales taxes when workers spend their paychecks, corporate income taxes, etc. so that even a nominally money losing deal might still be revenue positive. Because of our Federal system, it really is possible to rob Peter to pay Paul and corporations play different states (and even countries) off against each other.
The article mentions that in the NY solar deal, the rent on the $750 million plant will be $1 a month for 10 years, so I doubt that they are going to break even on that one.