When tycoons and politicians do business, taxpayers lose
If your blood hasn’t boiled in awhile, you must have missed the AJC story earlier this week about Range Fuels — a multimillion-dollar lesson in why taxpayers usually lose when billionaires with hare-brained schemes sidle up to politicians.
It’s been about a year since Range Fuels shut down its facility in Soperton, the South Georgia town where it had promised to turn our state into a world leader in turning wood into ethanol. There was just one problem: Range didn’t actually know how to turn wood into ethanol. The resulting failure cost taxpayers $64 million in federal loan guarantees and another $6 million in state funds.
This past week, the AJC’s Dan Chapman reported the sale of Range for a mere $5.1 million. The lucky bargain shopper? A New Zealand firm bankrolled by Vinod Khosla — the former tech executive who just happens to have been one of the main backers of Range.
Too bad Georgia didn’t invest in one of Khosla’s other ethanol endeavors: In its 2011 ranking of the richest Americans, Forbes described Khosla as “the rare Silicon Valley venture capitalist able to generate profits from a clean tech portfolio.” I’m sure his portfolio’s profitability has nothing to do with the fact that taxpayers shoulder losses by the million on dogs like Range Fuels.
To the degree the public is upset about inequality, the anger seems to stem less from the existence of inequality — which we’ve always had, and always will — and more from the belief that the inequal gains were ill-gotten. The belief that the system is being rigged.
The Occupy movement blames this chiefly on bankers and big business generally, the tea partyers on big government. They are both right when they notice the overlap between their respective targets.
Both parties are guilty of enabling this overlap. Range Fuels was handed money by a GOP governor, Sonny Perdue, and the Republican Bush administration; solar-panel flop Solyndra by the Democratic Obama administration. Both George W. Bush and Barack Obama oversaw bailouts of financial firms and auto makers. Need I go on?
And while failures make headlines, the relative successes line private pockets with public largesse, too.
The timing of this lesson couldn’t have come at a better time. As Georgia’s leaders mull ways to spur the economy during the 2012 legislative session, Range Fuels should be an indelible reminder of the folly of using taxpayer dollars and tax-code loopholes to enrich private firms and individuals.
That goes for the CAPCO scheme, which hands money over to private companies to invest without retaining a stake for the state.
That goes for any other effort that calls for the state to invest directly in private firms — an enticing opportunity for corruption now and years into the future.
That even goes for using hotel/motel tax revenues, once they are freed up from paying off the Georgia Dome, to build an outdoor stadium that will accomplish little besides cannibalizing the Dome’s business and making a lot more money for the Falcons.
The hidden danger of economic downturns is that they invite all manner of bad decisions made with scarcer-than-ever public monies, all in the name of “jobs.”
Yes, Georgia needs jobs. And, yes, there are things Georgia’s leaders can do to encourage their creation. But we don’t need more “friends” like Vinod Khosla, or more misadventures like Range Fuels.
– By Kyle Wingfield
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232 comments Add your comment
td
January 6th, 2012
11:56 pm
Lynn
January 6th, 2012
11:22 pm
Excellent example and reason we should have a consumption tax with no exemptions. The only true “fair” tax system.
Joel Edge
January 7th, 2012
4:50 am
Amen, Kyle. I live almost within rock throwing distance of the Range Fuel facility. All the money has just vanished. The vetting process for these schemes has got to be improved.
The REAL GodHatesTrash, Superstar
January 7th, 2012
5:22 am
Lynn, “fairness” is class warfare is socialism is pure evil.
People that have more money than you are better than you, and you should bow and scrape before them.
Ayn Rant
January 7th, 2012
5:32 am
Wealthy scoundrels will always outwit, or buy off, the elected politicians who are our state “leaders”. The public, which is the loser in these cash and carry deals, will beg for more abuse come next election.
JF McNamara
January 7th, 2012
5:44 am
In investment, you win and lose. That goes for Solyndra and Range fuels. Solyndra didn’t work, but the stimulus did. Range Fuels didn’t work, but film subsidies did.
Unless the entire portfolio is taking massive losses, the stop whining about cherry picked losers. Yave you done that, or are you just writing angry articles.
Before I get jumped on, GDP is rising and unemployment is falling, and it is directly tied to the stimulus. It worked.
marko
January 7th, 2012
6:18 am
The occupy crowd’s upset with big business, and the tea bunch is in a tizzy over big government. It will be interesting to see what happens when they figure out they’re mad at the same thing. Will we never learn that the ones that finance the campaigns are the ones pulling Senator Pinocchio’s strings. One day Newt’s a knight in shinning armor. A few million dollars later, he’s a turd on the side of the road. Is this really anyway for a sane people to govern themselves?
Lil' Barry Bailout (Revised Downward)
January 7th, 2012
6:33 am
JF McNamara: GDP is rising and unemployment is falling, and it is directly tied to the stimulus. It worked.
————————–
Putting a halt to most of Obozo’s agenda starting in January 2011 worked.
If we’re lucky, Americans will finish the job this coming November, evict Obozo from our White House, and take America back from those who would like to bring her low and from the Democrats. Oops, same thing.
GT
January 7th, 2012
8:20 am
I think the tycoon is the other side of the equation that is not highlighted enough. I agree government has no business in private business, but I also think business men have no business in government. It is almost the separation of state and religion thing. These politicians fall in love with tycoons like they were rock stars. Jimmy Carter became president because his little girl used the Cox’s swimming pool across the street. Politicians become like pro sport’s teams to the rich, only with these paid for politicians the tycoon can makes a ton of money without stockholders looking over their shoulders.
Halliburton is like a second woman hanging around a married man’s house. You might not be able to prove anything but you know something is going on. Why do these companies have to be so big? Lots of places to hide lots of laundry in a big company. I know brilliant men that have a hand full running small companies and there is no where for the money to hide because there is not much money and every cent is needed for capital, not lobbying and God knows what.
carlosgvv
January 7th, 2012
8:23 am
Kyle, it’s no supprise that putting politicians and Big Business together is nothing but bad news for taxpayers. I am amazed that you are finally admiting it.
Lil' Barry Bailout (Revised Downward)
January 7th, 2012
8:31 am
“Tycoons” are just free people doing what’s in their best interests. Lobbying the government gets results and is perfectly in keeping with our constitutional right to petition our government. Blaming the “tycoons” is like blaming the addicts. If you have a problem with crony capitalism, go after the dealers, not the addicts.
carlosgvv
January 7th, 2012
8:54 am
Barry
“Lobbying the government” for tycoons means bribing the politicians any way and every way they can. Politicians pay attention to those who have the most cash to distribuite. I don’t think this is what the founding fathers had in mind.
Lil' Barry Bailout (Revised Downward)
January 7th, 2012
8:56 am
carlosgvv, I agree wholeheartedly. The founding fathers most certainly didn’t have in mind that government would grow so big and all-powerful that the way to business success went through Washington.
carlosgvv
January 7th, 2012
9:20 am
Barry
It’s the other way around. The way to political success is to go thru all-powerful Big Business and do what you are told, when you are told. Especially if you are Republican.
Rafe Hollister
January 7th, 2012
9:24 am
Lil Barry makes a good point here, don’t miss it. A constitutionally based small government dedicated to do “only” those tasks assigned it by the Constitution, would not have the money available to be picking winners and losers, and rewarding the friends of the elected.
Lil' Barry Bailout (Revised Downward)
January 7th, 2012
9:24 am
Sorry, carlos, but business people don’t elect politicians. The people do. The politicians are supposed to work for us. Business people work for the shareholders and what they do within the law really isn’t any of our business. Lobbying is perfectly legal and constitutional. If you have a problem with the business/government relationship, focus on the part that is within the people’s responsibility to control.
GT
January 7th, 2012
9:28 am
Nor did the founding fathers see business growing so big. This country was founded on individual rights. The only people who would be against that are the ones it does not help. Hitler was not a big individual rights guy. I bet if his bare body was being delivered to a gas chamber he might have had a political epiphany. There is a “hello” moment in most “liberal” thinking, I prefer to call it moderate, and it usually is a personal experience while conservatives just want to be fat and happy and left alone to bother other people.
Lil' Barry Bailout (Revised Downward)
January 7th, 2012
9:29 am
carlosgvv: do what you are told, when you are told. Especially if you are Republican.
—————————–
Get real. GM. Chrysler. Solyndra. Fisker. GE. Obozo is the most criminal crony capitalist ever. And I only include the word “capitalist” in that statement since that’s the popular terminology. There’s nothing “capitalist” about Obozo. He’s a bought and paid for liberal fascist.
Lil' Barry Bailout (Revised Downward)
January 7th, 2012
9:31 am
GT: Nor did the founding fathers see business growing so big.
———————
Point?
Ross Perot
January 7th, 2012
9:33 am
My father was a brilliant man, one of 8 men in the world licensed to operate all make of Nuclear power plants in the world working his way up as a street thug through the nuclear navy. Prior to his passing in the mid 90’s his most memorable pieces of thought on what would ruin this country are as follows:
Letting either party have control of government. Vote checks and balances.
Letting speculators make money off of fuel.
Allowing lobbyists to have access to policy makers.
Not using more Nuke plants to energize the country, France is actually a leader in this area.
Not imposing term limits.
And his favorite saying, “The opposite of progress is congress”
Lil' Barry Bailout (Revised Downward)
January 7th, 2012
9:34 am
I doubt you’d want (or have the financial means) to buy an automobile or a gallon of gas or a flat screen TV from a small business.
GT
January 7th, 2012
10:00 am
Point is “too big to fail businesses” were not in the vocabulary of the founding fathers. Government interfering in business is like genetic farming. We have evolved a freak not intended by nature and certain immune to conventional controls of the economy or government. We don’t know what is private money any more and what is government or public money. Now you have these vampires lobbying congress to continue the same dysfunctional, non productive, self gratifying, schemes that got us into this recession in the first place.
Bush prides himself on not pardoning ex criminals in his last days of office yet he pardoned active criminals by the thousands in his bank bailouts. One was a ,written, constitutional given right the other was never dreamed of in the parlor of Philadelphia I assure you. One was politically beneficial to raise money for private pacts, the original pardon was more a sense of humanity by a country that use to believe in such.
Lil' Barry Bailout (Revised Downward)
January 7th, 2012
10:07 am
We’d be better off in the long run letting failed businesses go under. The government makes “too big to fail” possible by engaging in bailouts.
More government involvement, more bailouts.
More government involvement, suckier schools.
More government involvement, more illegitimate children without families.
More government involvement, fewer manufacturing jobs.
No, I don’t see a pattern here.
redneckbluedog
January 7th, 2012
10:07 am
Good morning…I’m back…The auto bailout was very successful….GM is adding more jobs in Detroit….and Fiat is buying a larger stake in Chrysler….and TN and GA are banging out the cars….
Watched McLaughlin last nite….It’s going to be Romney/Christie and Obama/Biden……Rubio is too risky…Could turn out to be another Palin…..Chances are it won’t come down to Florida anyway….Florida will be in play, though….but so will Virginia, Indiana, Ohio, North Carolina, Arkansas, Missouri, and Colorado……..
This is a good time to mention my third party hopefuls: Johnson/Paul….the only true conservative choice….They WILL show their tax returns and they AREN’T Mormon….and they aren’t Trump…
Lil' Barry Bailout (Revised Downward)
January 7th, 2012
10:10 am
Yes, you’re back, and so is your bigotry.
redneckbluedog
January 7th, 2012
10:17 am
I’m not a bigot….I’m just a Christian who cares about “the soul of America”…..
Rafe Hollister
January 7th, 2012
10:17 am
A Johnson/Paul vote is a vote for Oblamer! Divide and conquer.
redneckbluedog
January 7th, 2012
10:18 am
And actually, manufacturing jobs are up for the first time in 30 years….
redneckbluedog
January 7th, 2012
10:18 am
And my vice-presidential hopeful, Ron Paul, is a bigot, too…..
redneckbluedog
January 7th, 2012
10:19 am
Supposedly…
redneckbluedog
January 7th, 2012
10:20 am
If you want real conservative change, you have to be willing to work for it…and lay it all on the line….Romney is no more a conservative than he is a Christian…
bluecoat
January 7th, 2012
10:36 am
Party don’t matter much anymore.Cronyism name of game.Obama will never totally fit in.Racism is well and alive.It’s boiling down to middle class,poor,minorities need align against rich,corporations.They got rich off the poor mans sweat,and continue to take in form of taxes,inflation.
Hillbilly D
January 7th, 2012
10:37 am
On the subject of small business, there is a small independent oil company (the name escapes me), in SE Kentucky. Its market is a small area but as well as getting the oil out of the ground, it also has it’s own filling stations. When I was there, there gas was routinely the lowest priced in the area.
GT
January 7th, 2012
10:43 am
Hillbilly that was the Steve Jobs idea of vertical corporations. The consumer has a better experience. The experience of cheaper pricing is always a good experience.
Rafe Hollister
January 7th, 2012
10:49 am
Hillbilly D
We need more of that small business innovation, that is a good story.
Unfortunately the big ole Feds will find out they are doing well and move in with their environmental regulations, complicated tax rules, and oversight. The company will have trouble raising the money to comply, and a big company, with the money to buy off a congressman or two, will offer to buy them out. Happens every day in modern America.
Today our government wants to be in control, above all else.
Hillbilly D
January 7th, 2012
11:06 am
Rafe
It’s my understanding that that oil company has been in business for many years. Wish I could remember more details.
The experience of cheaper pricing is always a good experience.
I wouldn’t completely agree with that. In some cases, it’s true but you can look at the retail sector and see the drawbacks. Hard to find anything you want to buy that will last anymore or find any real service at the purchase point. One way they keep those prices low is by hiring people who don’t know a thing about their products, which are made to be sold at as low a price as possible, and if the purchased product doesn’t last a month, nobody seems to care. Too many people have come to the conclusion that it’s better to buy a product multiple times, than to buy once and have it last for many years.
MrLiberty
January 7th, 2012
11:09 am
Hey Kyle, thanks for making the case for supporting Ron Paul in the primary. As the only candidate speaking out against corporatism (the version of capitalism that has plagued this nation for at least the last 150 years), he is clearly the only one looking to return the power back to small business, the consumer, and the american people.
Rafe Hollister
January 7th, 2012
11:34 am
Hillbilly D
Is it Ashland Oil. I worked up there in the 80’s occassionally and that name comes to mind.
Rafe Hollister
January 7th, 2012
11:45 am
I just looked up Ashland Oil, huge company, Fortune 250, 8 Billion in sales. They own Valvoline and Marathon, so they probably are not as well known, due to trading under other names.
They started in KY in the 20’s, but have grown to be a worldwide corporation, in trouble in 1988 for cooperating with the Iranian’s.
Hillbilly D
January 7th, 2012
11:52 am
Rafe
I don’t think it was Ashland but I could be wrong. It was based in Somerset, Ky., I believe, and it was probably 5 or 6 years ago that I was there. I remember it was cheaper than any other station around. I seem to remember it even being full service but that may not be right. The ol’ memory ain’t what it once was. Several years ago, I read an article about them somewhere. I think they only serve SE Kentucky and perhaps a small part of Tennessee. Maybe somebody from up that way, will know.
Dr. J.
January 7th, 2012
11:53 am
The only decent editorial from the AJC in ages. I commend you, Mr. Wingfield.
Hillbilly D
January 7th, 2012
11:53 am
I typed that before I saw your 11:45. It wouldn’t be Ashland, though.
David
January 7th, 2012
12:17 pm
I second what Dr. J. said. I can’t even believe Kyle wrote this. Look at this:
“The Occupy movement blames this chiefly on bankers and big business generally, the tea partyers on big government. They are both right when they notice the overlap between their respective targets.”
That’s good, fair balanced stuff; without insult and with an understanding of each side’s point of view. Not the sort of thing you’d normally see in an AJC blog.
Gimme Gimme Gimme
January 7th, 2012
12:27 pm
Hillbilly@11:06 Too many people have come to the conclusion that it’s better to buy a product multiple times, than to buy once and have it last for many years.
My parents bought a living room/dining room set in 1968. The have had it reupholstered to upgrade the look but that furniture is a solid as the day they bought it, nothing wobbles or is cracked. The furniture you see today will last a few years before it is falling apart.
Gimme Gimme Gimme
January 7th, 2012
12:29 pm
David – That’s good, fair balanced stuff; without insult and with an understanding of each side’s point of view. Not the sort of thing you’d normally see in an AJC blog.
I have noticed Kyle writes a pretty balanced blog. I feel like I am learning something when I read it and not get getting talking points with an agenda.
Dusty
January 7th, 2012
12:53 pm
David,
It is quite easy to believe that Kyle wrote this article. He is an ethical man trying not to fall into the trap of slanted journalism so evident in other “journalists” at AJC. He seems committed to fairness and I hope he does not change. I don’t think he will.
In the meantime, I wonder how our leaders in government are going to help the economy. Most states can’t even encourage big projects without the help of the federal government but state and fed are deep in debt. Then the venture capitalist/project comes along sounding good and the states take a chance. Then we know what might happen and what did.
So what is the solution? What choice do governors have? Should they never take a chance ? Can any investigation in business really assure success? Can small business alone improve the economy? (I don’t think so.) Raising taxes only kills the consumers ability to buy. I’m just wondering what options are out there.
Linda
January 7th, 2012
12:57 pm
Noticed that most of the companies mentioned so far above were green energy companies. Our Dept. of Energy has been around since Carter, still trying to find alternative energy sources. Where would the US be today if the govt. had not spend billions upon billions of dollars searching for alternatives AND sending billions upon billions of our wealth to other countries for oil? Where would we be if we had just used our own natural resources under our feet? What if the government had just stayed out of the free market & allowed private energy companies to produce our energy?
The “green” agenda is totally out of control. Groceries are outrageous. There’s 40,000 products in the grocery store that use corn. Meat is outrageous since animals eat corn. Gas prices & the cost of delivery are outrageous because of the govt.’s limit on drilling & refining oil. Utilities are skyrocketing, as Obama promised. Coal plants are closing. Jobs are vanishing.
redneckbluedog
January 7th, 2012
1:07 pm
Rafe Hollister
January 7th, 2012
10:17 am
A Johnson/Paul vote is a vote for Oblamer! Divide and conquer
—————————————————————————————-
Romney is going to get creamed on his own anyway….He is a fake and a phoney….A fake Christian and a phoney conservative….Obama is no Jimmy Carter nor another Mondale, Dukakis, Gore, nor Kerry…and Romney is no Reagan, nor Bush I….and Bush II is still not all that popular….
Conservatives would be best served to vote their convictions….I intend to support Johnson/Paul, otherwise, Obama/Biden will get my vote….
Linda
January 7th, 2012
1:09 pm
Much has been debated & argued about the cause of this Great Recession. From personal experience, I know that the match was lit in the ’90’s with an ideology that homeownership was a right, not a privilege. That’s when conventional mortgage lending guidelines were relaxed & the GSEs given quotas for loans to low- & moderate-income buyers, especially minorities.
Of all the scenarios I have read, the report by the Republicans on the inquiry commission, appointed by Obama, was the most accurate synopsis. This recession would have never happened WITHOUT THE FEDERAL GOVERNMENT’S INTERFERENCE INTO THE FREE MARKET!
redneckbluedog
January 7th, 2012
1:10 pm
Linda
January 7th, 2012
12:57 pm
————————–
Both BP and ExxonMobil estimate world crude oil supplies at about 50 years…….Those are the facts…You can dance around them all you want…..Nat gas is estimated at close to 200 yrs, but as the oil expires and nat gas use expands, the integrated estimate is 100yrs.
redneckbluedog
January 7th, 2012
1:11 pm
Linda
January 7th, 2012
1:09 pm
————————–
There’s plenty of blame to go around …..Are you interested in going backward or moving forward..?