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.)