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The Failures of Corporatism on Display as Amazon Deals and Volt Dies

Tom Tom Shepstone
Shepstone Management Company, Inc.

There seems to be ever more corporatism these days—the use if government to advance special interests—and its failures are becoming ever more evident.

The Chevy Volt is dead and the Amazon deal is already in deep political trouble. Corporatism invariably fails because government is lousy picking winners and losers compared to the market. There is a great lesson in these two seemingly unrelated developments. It is that every big investment in corporatism is a likely future fiasco and it is always better to simply let markets work. That doesn’t generate graft, though, and so it continues, especially in the world of energy and environment.

Carrying taxpayer cash to Jeff Bezos, world’s richest man, courtesy of Andrew Cuomo?

No one can be blamed for imagining Andrew Cuomo should have learned something from the Buffalo Billion boondoggle and the SolarCity/Tesla hucksterism. Most people don’t know Andrew Cuomo, though. He’s arrogant, he’s greedy and he’s not especially smart. He supposes he can get away with anything and ever more so now following the election. He’s doubling down on the corporatism with the Amazon deal but it’s gone over like a lead balloon, as my father liked to say. Check out this story:

After Amazon announced Queens, New York and Arlington, Virginia as the locations for its HQ2, many residents in both cities have voiced their opposition to the decision.

The announcement came after months of bidding wars between U.S. cities, with multiple locations offering billion-dollar tax-breaks and the ability to potentially dodge strenuous land-review processes. In New York, specifically, officials agreed upon giving the tech giant $1.525 billion in direct incentives. In addition to the tax-breaks and special privileges the company will receive, the deal would give away multiple sites slated to provide 1,500 units of affordable housing in Queens — and New Yorkers are not pleased.

Amid growing backlash against what residents are calling the #HQ2Scam and #NoAmazonNYC, prominent community-based organizations across the city have come together to hold a day of action against Amazon.

This picking of a downstate winner over fracking, which would have been an upstate winner, is already looking like a loser unless you’re Andrew Cuomo. Andrew Cuomo knew the natural gas industry didn’t need any subsidies so there was nothing in it for him—no graft of either the honest or dishonest sort and nothing with which to pander.

Amazon, of course, wanted to be in New York City anyway, but it conned both him and his mortal enemy, the thrice-named commie Mayor, into giving away the store. The price will be revealed later in some form of graft and will amount to nothing in comparison to the New York taxpayer money they gave away to Amazon. Meanwhile, the Southern Tier continues to die for lack of an industry that required nothing but a semi-reasonable set of regulations.

The demise of the Volt provides another poignant example of corporatism. Here are the basics via UberGizmo:

As sales struggle to pick up, General Motors today announced that it’s ending production of the Chevy Volt, its plug-in hybrid vehicle. Production of the car will cease on March 1st, 2019. It’s part of a wider plan by the auto giant to reduce production in North America…

General Motors is executing its plan to stop production of a few brands that are not selling well

This is the biggest restructuring that General Motors has performed in North America ever since its bankruptcy about a decade ago. Investors seemed to like the decisions announced as the company’s shares rose 7.6 percent soon after the news became public.

The Volt was heavily subsidized and featured as a highlight of the government bailout of GM, but trying to sell something the government pushed but customers didn’t proved too difficult even under these favored conditions. Moreover, savvy folks realized an electric car is still a car powered by whatever fuel is used to generate the electricity, namely coal, nuclear, hydroelectric facilities (dams) or, more often than not, natural gas, so why spend the money only making it more complicated.

I was reminded of this yesterday when visiting a government office a couple of miles away from the newly operating CPV Valley Energy power plant in Orange County, New York. I parked alongside an electric vehicle. I think, in retrospect, it was a Volt but didn’t notice at the time. It was plugged into an electric charging station. That energy, in other words, was almost certainly produced by natural gas made next door.

That’s a good thing in many respects, but why go through the hassle and subsidize it just to make a few people feel good about themselves? The charging station could only handle one vehicle at a time and there were 50+/- other cars in the parking lot. It turns out most of us simply aren’t interested in paying extra for a car that is over-priced, subsidized by our friends and generally inconvenient. The Volt turned out to be a corporatist lemon.


Parody advertisement created by Ed Driscoll

Such is the nature of so much of the renewable “green energy” economy. It is pure corporatism everywhere you look. The Simons family, hedge-funders all, is financing the Energy Foundation and every other major fractivist group out of charity. They’re invested in this corporatism, just as so many other fractivist enablers. They want government to reward them the way New York is rewarding Amazon and the Federal government rewarded GM. This is dead-end economic policy compared to natural gas development that continues, without government help, to lift up economies everywhere.

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