When Does “Green Investment” Become Corruption?

Liberty Works reported the $529 million government loan guarantee granted by the Obama Energy Department to Fisker Automotive here and here in September, 2009.  Back then most of the establishment media were still enthralled with the new President they had so vigorously promoted into the White House and did not want to report anything that might diminish the Obama euphoria they had striven to create over the preceding two years.

But, after the Solyndra scandal and Obama’s slide in the polls the media are more interest in government loans for green boondoggles.

ABC news just published a long article examining loan guarantees for both Fisker and another, similar venture.  We reviewed the ABC News piece and found it to be consistent with our original reporting two years ago:

Fisker Automotive, Inc. is a start-up car company in California. Fisker has just begun to build the Karma, a hybrid/electric, luxury sports car that will sell for $97,000.  So far only two copies of the Karma have been delivered to retail customers.  According to ABC, production is running a year behind schedule.

Al Gore, former Vice President and grand ayatollah of the dogma of global climate change is a partner in Kleiner Perkins Caufield & Byers, a venture capital firm.  Kleiner Perkins Caufield & Byers is an investor in Fisker Automotive, Inc.  According to ABC other Fisker investors were large donors to the Obama campaign.

In 2009 The Obama Administration enhanced the value of Gore’s investment by loaning $529 Million to Frisker Automotive.  This money was, of course, borrowed from the private economy, leaving that much less to be invested in genuine, job creating business ventures.

Fisker Automotive predicts the Karma will be able to travel thirty two miles on a charge.  Then, it will have to be recharged, or it can continue, powered by its gasoline engine that delivers 20 miles per gallon, about the same as a typical SUV.

This utterly impractical, high-end, rich man’s toy is being built:

  • Not in Fisker’s home state of California where the unemployment rate is 11.9%;
  • Not in Michigan where the unemployment rate is 11.1% and 100,000 experienced auto workers are idle;
  • Not in the politically critical, must-win Presidential swing state of Ohio where unemployment is 9.1%

Fisker Automotive is building it’s new car in Finland.

Well, if the labor cost is higher here in America, maybe it makes business sense to move the manufacturing offshore, right?  Wrong.  According to the Labor Department’s International Labor Comparisons manufacturing labor costs, including wages and benefits, insurance and taxes average $33.53 in the US.  But  in Finland the average is $43.77!

Like traditional auto companies, Fisker supplements engineering accomplishments with generous doses of hype.   Last week was the big introduction shindig for the Karma.  But it wasn’t at a high profile auto show or a race track.   Fisker picked a venue that would honor it’s most important financial patrons by unveiling the Karma at the Mandarin Oriental luxury hotel (rooms starting at $750 per night) in… Washington D.C.

Political deals like this used to be done in secret and were called “corruption.”  Sometimes government officials were caught and prosecuted for corruption.  That was when the political establishment worried that a majority of Americans would oppose such imperious defiance of the U.S. Constitution and of common sense.

But that was then.  Today’s openly corrupt Political establishment no longer fears the voters.  Instead, voters have begun to fear an increasingly authoritarian and powerful central government, led by arrogant and ruthless politicians, bent on imposing their will on the people – at the people’s expense.

In its defense Fisker offers the assurance that funds from the taxpayer backed loan were spent on design and development costs within the US, and the Finland operation is financed by private investments.  But this is an utterly specious rationalization because there would be no manufacturing in Finland or anywhere else had the taxpayers not first risked the investment in design and development!

ABC News quoted the following from a written statement it received from the Office of Vice President Biden who has been the Administration’s front man in promoting the Fisker investment:

the Office of the Vice President did not encourage the Department of Energy to choose any particular company over any other but, like others in the Administration, supported the Department’s loan program and the creation of car manufacturing jobs in the United States.

So, the Administration’s position is that all is fine as long as voters believe Biden didn’t order funding of a specific company.  The media seem to believe this deal would not be a problem if the factory were here in the US.

But Americans should be outraged because it’s immoral and Unconstitutional for government to use its power to force The People to risk tax dollars on development of a selected product, because the product is favored by the political elite and/or because an establishment good-old-boy (Gore) is an investor.  The Constitution does not allow and has never been amended to authorize the government to invest in any private business for any reason.

If $98,000 electric cars were desired by enough real customers who were able and willing to pay the price the private sector would gladly make the investment and produce them without any help from government.  Investors putting their own money at risk, would make the decision, not government officials tasked with promoting a political agenda, involuntarily funded by taxpayers.

That taxpayer funds will be sunk into foreign manufacture of this absurdly expensive and useless vehicle that will never sell enough units to recover the initial investment only supports our suspicion of de facto corruption.

5 Comments so far

  1. Jallentz on October 22nd, 2011

    This post is a MF lie. The loan specifies that the money can only be spent in the US.

    The private sector is run by Wall Street and is short sighted and always focuses only on the next quarter. It takes farsighted vision to put America out front of the rest of the world in the advanced technologies of the future. These are small investments in a $15 trillion economy and well worth it.

  2. Jack King on October 23rd, 2011

    To Jallentz –

    Where’s the lie? This “investment” is nothing more than a trick to funnel tax money to Obama donors. This car is ridiculous. Nobody will pay so much for so little.

  3. Thousand Flowers Blooming on October 23rd, 2011

    The purpose of these loans is to kick start American participation in the 21st century. It isn’t important that each product be a financial success. The Fisker is a demonstration project producing new technologies that will be adapted by others who are smart enough to invest in the future.

  4. Beau on October 23rd, 2011

    I guess you will want to place a facebook icon to your blog. Just marked down this blog, although I must make it manually. Just my $.02 🙂

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  5. Drew on October 23rd, 2011

    Let me help you out, Boomer.

    If Bush does it its watefull crony capitalism.

    If Obama necessary investment. The most beautiful, and predictable response was this: “It isn’t important that each product be a financial success.” Always the view of those spending other people’s money.

    And I’ve always said, the road to a green economy runs through $97K cars. Hard to argue with that logic (snicker)