Sunday, May 29, 2011

Crony Capitalism

Is Obama's latest plan a sham, or just a bad idea?
Even if it is instead a legitimate attempt to spur the economy, it should be met with skepticism — as should all such government programs. Government is rarely good at picking economic winners and losers, even when attempting to be objective. Startup America openly mixes political priorities with economic goals. Specifically, one of its core goals is to “inspire and empower an ever-greater diversity of communities and individuals.” Such a divided mission is a blueprint for failure and political payoffs...

The program has two distinct strategies. One part is government action — mainly, providing capital for startup companies using $2 billion given by the Small Business Administration. This infusion of capital is probably the wrong tool for the job of jump-starting the economy. “A shortage of private equity is not what’s holding back America,” says Karlyn Mitchell, professor at NC State University and former Federal Reserve economist specializing in small business finance. (The more likely culprit for the economic malaise is uncertainty about the future.)


MikeAT said...

No Darren, you got it wrong.  B Hussein Obama said he will get on companies to start hiring more ....they were just waiting for him to give the word.  

"We've got a lot more work to do to get businesses to invest and to hire," ..."It is time for companies to step up," and  ..."American taxpayers contributed to that process of stabilizing the economy. Companies have benefited from that, and they're making a lot of money, and now's the time for them to start betting on American workers and American products."

Jobs: Obama Tells Companies to 'Step Up' and Hire Workers - CNBC
The concept that companies don't hire until they have work to do and that require sales/clients and if a company is using loans to make payroll they are probably one step from bankruptcy is not something that would offer to an academic would knows little other than faculty lounge tripe.
God, how did this country ever get this bad off...

Ellen K said...

I was listening to talk radio this morning and a small business owner in Florida was discussing the problems with SBA loans. While the interest rate is lower, the SBA uses evaluations that are the highest they can find on the properties they loan money for. In addition, the Environmental Impact Statement might open up the business to more restrictions despite the fact that the business has been in the same location for nearly 15 years. This is what is wrong with government. They obstruct more than they channel services. And in doing so they create jobs which cost us more and create more paperwork in what was supposed to be our "paperless society."