Picking losers: Inevitable

Mitt Romney delivered several good lines in the first debate. Did the President really pick losers? Did he have any choice?

DENVER, October 24, 2012 – Presidential debate, Denver, Colorado: “You don’t just pick the winners and losers, you pick the losers.”

One of the best lines uttered during the first presidential debate was both telling and redundant. Governor Romney had just listed a number of President Obama’s pet investments, investments — gambles — in which the US taxpayers got hosed.

The President had no answer; he needed a list of successful “investments” into which he had thrown our money. None, apparently, came to mind.

In the President’s defense, I offer this, which should be obvious: There is no reason why successful businesses would need “government money.”

Successful companies with believable business plans can get financing through regular equity and debt channels, financing without all the government strings and de facto control that come to those who need to supplicate before politicians.

The companies don’t mind the political strings that are attached; the market has already pretty much told them their business plans are failures, anyway.

Companies that don’t have anything with which to convince sober investors to part with their money often find that politicians will lend other peoples’ money more easily, particularly if a political point can be made.

Whether it’s Solyndra or A123 or General Motors, it has to be a crummy deal for the one who’s doing the lending. Creditworthy companies can get financing; they don’t have to beg Big Brother.

So, our rulers, looking for investments at which to throw our money, are left with only lousy choices. That’s why politicians make such lousy investments. They have to: all the good investments are taken.


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Tim Kern

Tim Kern taught economics for fifteen years, and discovered that understanding life is easy; it’s recognizing reality that takes practice. He holds a music degree, and later earned an MBA in finance from Northwestern University. He has lived across the US, and now makes his home in Anderson, Indiana.

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