The Obama Administration recently announced that $70 million of your taxpayer dollars will be spent over the next five years on a public-private manufacturing innovative initiative. If you’re asking why such an initiative can’t be fully funded by the private sector, move to the head of the class.
The partnership includes 25 companies, three universities, and several research laboratories. Businesses should partner with universities and national laboratories if they identify opportunities to do so. In fact, many of the 18 companies involved in this partnership do make use of such resources. But taxpayer money does not and should not be a conduit for those relationships to form.
Companies can make those investments with their own money and concentrate their resources on what they believe is most promising. When the federal government distorts those investments by sweetening the pot with taxpayer money to direct funding where they want it to go, it cripples the process of innovation. The more government participates in the market as an investor, the greater its temptation to shape the rules to advance its own interests.
Further, because they are not risking their own money, politicians and bureaucrats will bear almost no responsibility for the outcome of the investment. This allows them to take credit when an investment succeeds and deny blame when it fails.
Programs like this also promote cronyism. In this relationship, the politician helps the business gain market advantage, and the successful business helps the politician advance his political agenda. The result is, at best, a brand of cronyism where businesses develop strong relationships with public officials to ensure that public policies support their economic interests. And it keeps those companies politically connected. Most of the companies taking part in the Department of Energy’s (DOE) latest round of founding have received taxpayer support in the past:
- ABB for offshore wind;
- Arkansas Power Electronics International for motor drive research;
- Avogy for developing “highly efficient low cost vertical Gallium Nitride transistors”;
- Cree for more efficient light bulbs;
- John Deere in DOE’s cost-shared Commercial Building Partnership;
- Delphi was a stimulus recipient for electric vehicle development;
- Delta for electric vehicle charging infrastructure;
- GridBridge for cost-effective, solid state transformer for grid modernization;
- IQE for solar development;
- Monolith Semiconductor for improving efficiency in power conversion;
- Toshiba for solar energy installation in the Virgin Islands;
- Transphorm for electricity conservation; and
- United Si Carbide for high-temperature smart sensors.
Since these are primarily the companies that focus on energy efficiency applications, it’s logical that they would be recipients. But so long as the government directs the flow of investment, the companies connected to the government will continue to benefit. This is why Congress should eliminate these programs that promote corporate welfare and allow private companies, using their own resources, to use America’s lab and university system or partner with other private companies if they believe it is in their best interest to do so.