Barack Obama is quickly becoming my favorite president. I'm not kidding. Since taking office, President Obama has provided so many freemarket “teachable moments”—more than even he is aware—and such moments are starting to resonate with Idaho policymakers who are quick to insist that Washington, D.C., is so not Idaho.
Take the federal government’s $535 million loan guarantee to the now-bankrupt Solyndra solar panel company. Why did the government step in to help Solyndra? Of course, there’s a lot of speculation about corporate and political cronyism, but the White House continues to vouch for the deal as part of federal government’s commitment to non-fossil fuel energies.
Putting aside the allegation of favoritism, local and state officials wonder aloud why the federal government picks winners and losers in this fashion. And they marvel at the scale of the decision. Using taxpayer money to give one company a leg up in the marketplace? Outrageous!
Ah, but we do that here in Idaho. Exhibit A: The decision by Twin Falls policymakers to use taxpayer funds to build a yogurt plant. Exhibit B: Coeur d’Alene’s decision to help subsidize rental apartments. Exhibit C: Boise’s decision to subsidize an office and retail complex in downtown. And on and on and on. Those deals may or may not work in the long run. Failure is endemic: Exhibit D: Pocatello providing a zero-interest $400,000 loan to a company that later couldn’t repay it. Exhibit E: a Caldwell coffee shop, subsidized by taxpayers, which folded. Exhibit F:Financial failure in a Post Falls urban renewal project.
Now comes the decision by the Otter administration to use $5 million to help spur technological investments in Idaho. Exactly whose money is this anyway? And what could possibly go wrong?
The money came from taxpayers, through their blood, sweat and tears. Through their sacrifice. Through their determination. It’s their money. And were the government to leave taxpayers alone and allow the free market to work, they would have a lower tax burden. And through those lower taxes, they might use their profits any number of ways – to hire new employees,make capital investments, purchase goods and services–maybe even start the very companies Otter and lawmakers want to lure here through the appropriation of $5 million.
It is not my intent to demean the governor and legislators who clearly mean well when they say they want to create a fund that would inspire innovation and lead to greater investment in Idaho. But who is Otter or the Legislature—or their surrogates—to decide who wins and who loses in the marketplace? Even if the state government picks what it believes is “the right company” to benefit from its plan, what about the company that also did everything right, that suffered through and made it to the finish line without the support of the government?
And how is Idaho’sdesire to manipulate the free market different from what the Obama administration tried with Solyndra?
In Milton Friedman’s “Free to Choose” documentary, the brilliant economist is seen walking down a busy street in Hong Kong, marveling at how raw capitalism and free markets had transformed the city into a beacon of wealth and opportunity. Said Friedman, "This miracle hasn't been achieved by government action—by someone sitting in one of those tall buildings and telling people what to do. It's been achieved by allowing the market to work.”
The reason Solyndra happened is because President Obama lacked faith in the free market. I have faith in the free market. Milton Friedman had faith in the free market. Idaho’s policymakers should, too.