Our government has spent much money bailing out General Motors, Chrysler, Wall Street, etc. And it has given billions to green companies, like Solyndra. They do this because, they claim, government investment is crucial to innovation.
They say that windmills won't exist if the government does not subsidize them. And they're right about that because windmills are not cost efficient and are not an economical way to create energy. Inside information: a windmill will take 10 years to break even, and will be obsolete in 20. No non-subsidized companies will accept to wait 10 years before making money. A private company would not like to wait five years before making a profit.
Are there any examples of subsidized companies working well, or not working at all?
Burt Folsum has some examples:
What examples from U.S. history support the transfer of funds and
power from private to government control? In other words, do we have
historical precedents for successful government subsidies to private
companies? Also, do businesses owned by the federal government perform
Let’s review some historical examples. President George Washington
experimented with government control when he supported passage of a law
to set up a federally funded fur company for the Northwest Territory.
President Washington thought this government-run company would help to
prevent the British from encroaching on U.S. land, because agents of the
British-owned Hudson Bay Company bought furs from the Indians in the
Unfortunately, Indians and trappers alike despised the inefficient
American company, but John Jacob Astor became a part of the solution. As
a new resident of the United States, Astor founded his own private
company and successfully bought furs from the Indians, making a fortune
in the process. Under President Monroe, the U.S. finally disbanded the
nearly bankrupt government company, sold its assets, and allowed the
more competent private U.S. companies to do all the nation’s fur
During the Civil War, President Lincoln signed a bill to build the
country’s first transcontinental railroad from Omaha, Nebraska, to
Sacramento, California. The federal government would do the financing.
After granting roughly $60 million in land and another $60 million in
federal loans, the bureaucrats were in dismay. The Union Pacific and
Central Pacific had done a poor job of construction, and the road went
bankrupt several times by the end of the 1800s.
Airplanes were another example. By 1900, some Americans worried that
Europeans would invent the airplane and possibly use it to dominate
other countries (including the U.S.) militarily. Government support, so
the argument went, was therefore essential to stimulate Americans to
inventive greatness. Samuel Langley, head of the Smithsonian
Institution, received a federal subsidy to continue his research into
manned flight. Langley conducted two public experiments with his
federal dollars and launched his inventions on the edge of Washington,
D.C. Unfortunately, both flights crashed ignominiously into the Potomac
Within two weeks after the second launch, the Wright
Brothers–two bicycle mechanics from Dayton, Ohio–flew the first
successful airplane at Kittyhawk, North Carolina, financing the venture
with $2,000 of their own money.
For some reason, federal subsidy and control often diminish the
chance of an enterprise being successful. In some cases, this occurs
because federal officials don’t have the same abilities or incentives as
entrepreneurs. Another reason is that federal control equals political
control of some kind. What is best for politicians politically is not
often what is best for businesses economically. Polticians want to win
votes, and they can do so by giving targeted voters benefits while
dispersing costs to others.
Asking the right questions focuses attention in the right direction:
What federal subsidies and takeovers have ever improved the prosperity
or quality of life for most American citizens? Until advocates of
government-run businesses can answer that question clearly and with
persuasive evidence, we should reject further federal intrusion in the