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
Michael H. Smith
January 7th, 2012
8:05 pm
We already have a progressive income tax and it is evil and Marxist. It punish ambition, innovation and upward income mobility by confiscation, then redistributes what it seizes unjustly and deceitfully as a government social remedies to reward the reckless, the slothful and those trapped by an addiction to government stipends.
What we need is a two tiered flat tax that rewards ambition and innovation to produce and distribute maximum opportunity, zero or very low corporate taxes competitive to corporate tax rates charged by the rest of the world’s nations. CEO pay and shareholder distribution another subject altogether. However the shareholders the small 401k and IRA investors are the ones really getting screwed over by today’s Corporate America.
Lil' Barry Bailout (Revised Downward)
January 7th, 2012
8:08 pm
“When you exploit the people,make more money for shareholders.Are you being just?”
——-
Corporations make money when customers decide to buy their products or services. Government takes citizens’ income to pay for failing schools, crime infested housing projects, and bridges to nowhere. If any institution is doing some exploiting, it’s the government.
If you put your faith in government, your an idiot or a parasite.
MrLiberty
January 7th, 2012
8:10 pm
oops, hit the enter key.
Corporatism is the unholy alliance between government and business and in most places on earth it is also properly referred to as Fascism as well. We do not have capitalism in this country. We have corporate capitalism, where the power of government is used to enhance certain businesses at the expense of others or the citizens.
Republicans typically endorce ANYTHING that puts money into the hands of business (even if it is stolen from taxpayers, etc.) Democrats are just as bad, but hide their criminality by giving the money to “worthy causes” like Solar energy companies, Libyan rebels “fighting for their independence” and other less than admirable causes.
Only true libertarians (among with I will happily count Ron Paul) have been speaking out about the imperative need to dismantle the power structure of govenrment in order to eliminate the mechanism by which these corrupt schemes exist.
Far too many think that we can keep government big and somehow not have these problems. They think that not a single cent can be cut from the pentagon budget while billions and billions are “lost” by Haliburton and others in corrupt schemes to rob the american people blind.
Government power is the ONLY means by which these things can happen and only Ron Paul among the republicans (and of course the democrats) is bothering to run on this platform.
And don’t you think that is why both parties are so afraid of him!
Ron Paul 2012.
Lil' Barry Bailout (Revised Downward)
January 7th, 2012
8:16 pm
Democrats don’t fear Ron Paul. Ron Paul in the general election means Obozo’s fascist regime gets four more years to do its treasonous work of destroying the American economy.
Michael H. Smith
January 7th, 2012
8:19 pm
“When you exploit the people,make more money for shareholders.Are you being just?
Yeah I want a piece of that one too…
You bet it is just. That is the way capitalism is meant to work. Your money should, by means of investment, work twice as hard for you, as you by your labor worked for it. Everyone should be an investor of some sort, it is the way, probably the only way, to gain and accumulate wealth. That is why CEO pay verses shareholder stock values needs correcting and I’d be for doing it by government regulation if necessary. Shareholders should be getting the lions share of profits not these CEOs’ who are ripping them off and bankrupting their corporations.
I Report (-: You Whine )-: mmm, mmmm, mmmmm! Just sayin...
January 7th, 2012
8:22 pm
So much for the Aint’s putting the Cryin’s away early.
gitmo, wtf? Ever heard of d-fence?
Linda
January 7th, 2012
8:23 pm
Michael@8:05, Well said.
Lil' Barry Bailout (Revised Downward)
January 7th, 2012
8:23 pm
MHS, shareholders dissatisfied by CEO performance or compensation are free to sell their shares. No regulation required.
Linda
January 7th, 2012
9:00 pm
Is it just me, or does anyone else crave Frosty Flakes when watching the Cincinnati Bengals? Is there anyone even associated with the team named Tony? If not, they are likely to be investigated by congress. (I refuse to capitalize congress.)
Criminal Minds is one of the most popular shows today. Its about serial killers. Congress’s approval ratings are below serial killers, child molesters, rapists, drug kingpins, etc. How is C-SPAN staying in business? Taxpayer money?
Hillbilly D
January 7th, 2012
9:06 pm
CSpan is funded by affiliate fees paid by cable and satellite providers, I believe.
Linda
January 7th, 2012
9:30 pm
I’m what you call a trivia expert when it comes to pro-football. Does anyone know the name of Drew Brees brother? It’s Fab & he keeps the Super Dome smelling great.
Does anyone know what Cam Newton plans to name his first child? Named after his favorite Turkish fruit: Figs.
I Report (-: You Whine )-: mmm, mmmm, mmmmm! Just sayin...
January 7th, 2012
9:34 pm
Does Ron Paul sound like barakkk obozo, or what?
bluecoat
January 7th, 2012
10:05 pm
MHS DO you think the onion growers in Ga.should pay the help low wages,then when these people need help, taxpayer responsibility?Then whine because you feel screwed the ceo gettin paid too much,and your shares are worth less.Summation it’s ok to be unjust with anyone except special me.
Linda
January 7th, 2012
10:29 pm
bluecoat@10:05, Do what? English, please. Spelling & complete sentences/questions would be helpful to understand your gripe.
Michael H. Smith
January 7th, 2012
10:45 pm
Lil’ Barry Bailout (Revised Downward)
January 7th, 2012
8:23 pm
It really isn’t that simple lbb, there is a great deal more to correcting the problem than simply selling your shares. Not to mention that particular answer – not the person who gave it – is very glib at best.
Lil' Barry Bailout (Revised Downward)
January 7th, 2012
10:47 pm
blue objects to folks having to work for a living. He’s bought into Obozo’s vision of a moocher’s paradise where someone else pays your bills.
bluecoat
January 7th, 2012
10:48 pm
Newt sure took the gloves off.Romney need be careful with China.They own us.
Michael H. Smith
January 7th, 2012
10:49 pm
MHS DO you think the onion growers in Ga.should pay the help low wages,then when these people need help, taxpayer responsibility?
First off who are “these people”? I believe you are dishonestly baiting here.
And as for your trash talk directed at me and I don’t mean to be kind about it because YOU started down and I do mean DOWN the low path
SCREW YOU!
Michael H. Smith
January 7th, 2012
10:49 pm
Romney is spot on with China.
Lil' Barry Bailout (Revised Downward)
January 7th, 2012
10:51 pm
Yeah, it is that simple, MHS. CEO pay is only your concern if you’re an owner (shareholder) of the company. If you are an owner, convince the other owners to replace the elected board of directors with one that will run the company according to your wishes.
And if you aren’t an owner, it frankly isn’t any of your concern and does not affect you.
Michael H. Smith
January 7th, 2012
10:55 pm
“replace the elected board of directors ”
Think so do you?
Can you tell me who was on the board of directors of Home Depot when Bob Nardelli was CEO of that corporation?
Michael H. Smith
January 7th, 2012
10:58 pm
Caught you guard lbb?
Michael H. Smith
January 7th, 2012
11:03 pm
I know I did, so I’ll spare you the hunt for the info.
Two of the board members were Bob Nardelli allies he brought over from GE intentional seated to cover Bob’s butt in case someone wanted to end Bob’s tenure as CEO.
As I said it really isn’t as simple as you make it sound. Boards of directors are packed with friends to do nothing protect their CEO friend who put them on the board.
bluecoat
January 7th, 2012
11:07 pm
All do not have their parents money to manage.Oriental wife to keep then up.Do not tell us you work,you stay on here 24/7.It ’s not folks having to work,just me.special me.
Michael H. Smith
January 7th, 2012
11:10 pm
The fictitious comical stories that appear on these blogs.
Michael H. Smith
January 7th, 2012
11:22 pm
Lil’ Barry Bailout (Revised Downward)
January 7th, 2012
10:47 pm
Some people will always envy and covet what others posses and hate those of us that find the sickness of envy and covetousness morally corrosive to the soul.
Linda
January 7th, 2012
11:36 pm
bluecoat@10:05, 10:48 & 11:10, Please speak English. We’d like to communicate with you if you could just make complete sentences. Hello!
bluecoat
January 7th, 2012
11:37 pm
Money can’t work for you.Money is a tool.
bluecoat
January 7th, 2012
11:41 pm
G– hates covetousness,same as immorality.
td
January 8th, 2012
12:06 am
bluecoat
January 7th, 2012
11:41 pm
Your really need to turn off the PC and sleep off that drunk or high you are on my friend. Come back tomorrow and we may be able to understand what you are attempting to communicate.
Today’s Rebellion News – January 8th 2012 | Rebellion News
January 8th, 2012
1:17 am
[...] When tycoons and politicians do business, taxpayers lose [...]
Lil' Barry Bailout (Revised Downward)
January 8th, 2012
6:29 am
Michael H. Smith: Can you tell me who was on the board of directors of Home Depot
—————————-
Yes. Whoever the owners selected. You do understand that the owners (shareholders) select the board of directors, and that the elected board of directors hires/fires the CEO and sets his pay, right?
Lil' Barry Bailout (Revised Downward)
January 8th, 2012
8:16 am
bluecoat: Money can’t work for you.
————————
Sure it can. People with extra money provide a valuable service to society by allowing others to borrow it in order to start businesses, hire people, build homes, purchase expensive durable goods. Those who provide this service and take the associated risks are compensated in the form of interest or the expectation that they will be able to sell their investment to another for an amount greater than the initial amount.
This annoys the know-nothings, economic retards, and moochers to no end.
carlosgvv
January 8th, 2012
8:27 am
Barry – 9:29
So, you want to get real about the Republicans? Well and good.
1. The Republicans have made it crystal clear they won’t allow any tax increases on the rich. However, it’s ok with them to tax the middle class and poor.
2. The Republicans are doing everything possible to torpedo the Consumer Protection Bureau. This will make it easier for Big Business to swindle us consumers.
Going thru your political life being blind in one eye and not being able to see out of the other is never a good idea.
GT
January 8th, 2012
8:31 am
My question today is why would a casino owner pony up five million dollars for a lost cause? I can remember a State of the Union address where Obama mentioned these packs make the national elections a eBay bidding process. I also remember the unruly Republicans booing whatever like comment he made. How silly is it to even have campaign contribution laws? My thought on the contribution is it really is a contribution against the far right? I cannot believe a man owning and making a fortune in gambling subscribes to the philosophies of the Tea Party. If you can keep this part of the party watered down a more moderate has a chance to carry the election, Newt has not got a snowball chance. Gingrich is not taking votes from Mitt, he is taking them from the right and our Newt has proven he can be bought. Rick Santorum, in particular, probably scares Las Vegas. The only way the Tea Party is going to bring its full strength to the party is to grow up and get organized. They need one candidate representing them, but as long as Ron Paul at 76 is in the primary it will not happen. They run that party about the way they run congress, maybe we all should give Newt some of our money. Keep an eye Marianne she will probably be doing an good imitation of Elizabeth Taylor sporting some of her new baubles. This five is a windfall for Ms. Gingrich the third.
Lil' Barry Bailout (Revised Downward)
January 8th, 2012
8:31 am
carlos, please cite for us the Republican policy that will increase taxes on only the middle class and poor.
Lil' Barry Bailout (Revised Downward)
January 8th, 2012
8:51 am
Didn’t think so.
Jm
January 8th, 2012
9:19 am
Well who ya gonna endorse Kyle?
Ron Paul? I mean he’s just whacky
Lil' Barry Bailout (Revised Downward)
January 8th, 2012
9:30 am
The Republicans aren’t proposing raising taxes on anyone–rich, middle class, or poor. Which guarantees that half of Americans will continue to contribute nothing in income taxes to pay for the operation of the federal government.
GT
January 8th, 2012
9:38 am
If it keeps us from fighting these crazy wars where we leave billions in infrastructure to the enemy, I am all for not taxing anyone, why waste our money? Barry is you are what you say you are you should be in church, see ya there hot shot.
Lil' Barry Bailout (Revised Downward)
January 8th, 2012
9:39 am
What do I say I am, GT? Methinks you think too prejudicially for your own good!
The REAL GodHatesTrash, Superstar
January 8th, 2012
9:54 am
Lil’ Barry believes in the Trinity – Curly, Larry, and Moe. Especially Curly, the simplest, silliest Stooge.
@@
January 8th, 2012
10:19 am
Someone needs to arrange a game of ping pong between Ahmadinejad and Obama…then…?
All our problems would be solved.
schnirt
Michael H. Smith
January 8th, 2012
10:22 am
Lil’ Barry Bailout (Revised Downward)
January 8th, 2012
6:29 am
You obviously ignored what I said about board members right? Even after I pointed out a situation that happens all too often with a case made in point? BTW, there was a write-up, in depth too, citing the facts of the very case I used to point out the problem with your overly simplistic approach and why it won’t work like you think it might.
You really need to face some reality here, the deck is being stacked, the normal process is being rigged and the fix is in so to speak. By the time enough stock needed to be sold was traded in order to drive a CEO out of the company the share price and company as well would be nearly destroyed and the shareholder would suffer the real loss not the CEO.
Apart from that being said again, one look at the extreme differences in CEO and executive compensations in some of these corporations verses stock owner shareholder returns on investment should sound an alarm that further corrective actions need to be taken that exceed what market base principles alone, simple ones included, just haven’t been able to do.
Do keep in mind the huge number of people…. and we are talking about the quote unquote low and middle income folks here, who are relying on 401K and IRAs to provide a retirement income. So if the game is going to be rigged I want it rigged in their, our favor – not in the favor of crummy Bob Nardelli type board members and CEOs’ who walk away with hundreds of millions of dollars for losing millions if not billions of dollars of shareholder wealth.
MrLiberty
January 8th, 2012
10:47 am
Yes, supporting and defending the constitution, supporting sound money, small government, ending the income tax, an america-first foreign policy, freedom, liberty, personal responsibility and end to the growing US surveilance state – that’s just plain wacky!
Endless wars, unlimitied military spending, billions in foreign aid to dictators, phony fiat currency combined with interest rate manipulations and rampant inflation, giant bailouts for banks and key businesses, spying on US citizens, assassinating US citizens without due process, imprisoning US citizens without evidence or due process – yeah, those are the things we need in a president (by the way, every other republican presidential candidate supports virtually every one of these – as of course does Obama).
Ron Paul 2012.
redneckbluedog
January 8th, 2012
11:15 am
MrLiberty
January 8th, 2012
10:47 am
————————–
Don’t forget about Gary Johnson….Ron Paul could join him on the Libertarian ticket….
redneckbluedog
January 8th, 2012
11:16 am
Governor Johnson has a pretty good resume….and is not so “wacky”….
Rafe Hollister
January 8th, 2012
12:04 pm
redneckbluedog
There is only one problem with you fantasy, involving Johnson/Paul. Dr. Paul has an ego the size of Michelle Oblamers rear end and would never agree to play second fiddle to some pot smoking milk toast governor of New Mexico.
Lil' Barry Bailout (Revised Downward)
January 8th, 2012
12:19 pm
MHS, all directors face the shareholders at regular intervals, so even those who are buddies with the CEO come up for a vote.
Your kind of thinking is a dangerous threat to free market capitalism. Corporations are to be run by and for the owners–not as some kind of public utility. There seems to be a movement among the left to make corporate boards answer to the public rather than to their owners, and that will pretty much destroy capitalism. Liberal fascists like Obozo do get all warm and fuzzy when they hear thoughts like yours. Given your thinking on other economic topics, this capitulation to know-nothing populism is surprising.
I Report (-: You Whine )-: mmm, mmmm, mmmmm! Just sayin...
January 8th, 2012
2:17 pm
Did y’all get to see Stephanophylis and diane sewer foam up and babble at the Republicans trying conduct a decent debate?
Ban contraception? What sort of faculty lounge, ate up liberal ridiculousness was this?
They even managed to make Romney seem normal.