Timothy P. Carney writes in The Washington Examiner on May 9, 2012:
“Here’s the state of Republican economic policy today: A $35 billion federal loan-guarantee program for wind and solar companies is scandalous “crony capitalism” that must be shut down and investigated.”
“But a $100 billion federal loan guarantee program mostly benefiting Boeing and Caterpillar should be expanded by 40 percent.”
Both Democrats and Republicans have used tax-payer paid for loan-guarantee programs to support certain industries that they determine need support to sustain the American economy.
The Republicans have denounced green energy taxpayer stimulus grants that have gone wrong while the Democrats have denounced other “crony capitalism” loan-guarantee support.
The government, through the stimulus program, has been giving taxpayer grants to companies with the goal of generating “employment” and/or loans or loan guarantees, with no provision for a first-position recoupment position. There is no employee ownership stipulation. The government should always require broadened ownership, in companies that receive financial assistance, of the productive capital assets among the employees, who would pay back their acquisition of ownership out of the earnings of the investment.
While financial support from the government is the purpose of the stimulus program, the structure of the support should be in the form of insured loans as restructuring and investment capital. Such a financial mechanism should be put in place that will guarantee loan risks provided by banks and lending institutions. Otherwise, the system will continue to limit access to capital acquisition to those who already own capital—the rich.
Criteria must be created to qualify the corporations subject to this policy and those corporations that qualify overseen so as to insure that their executives exercise prudent fiduciary responsibility to generate loan payback. Once the guaranteed loans are paid back, the new capital formation will continue to produce income for existing and future owners.
The companies receiving such financial support should always qualify as succeeding companies within a major industry with long-term productivity growth potential with the resulting benefit of promoting the diffusion of advanced technology into civilian industries. The loans should be used to modernize and build new superautomated and computerized robotic assemblies. Where necessary the monies should be used for supplemental retraining of labor workers to qualify them for the new jobs created. Most important, the profits from the investments should be fully paid out to new capitalists owners––the corporate employees. This should be a condition to receive the capital investment loans. The goal would be to create new capitalist owners simultaneously with the growth of the economy financed with government loan support. The profits would represent wealth created by public capital invested in such companies and industries.
The desired result would be to decrease, rather than increase, the existing concentration of productive capital ownership and thus economic power in the hands of a minority. The credit mechanisms supported by the government would not involve the expenditure of any tax money and would support profit-making operations for the primary purpose of earning dividends for the companies’ stockholders, including the newly created capitalist owners. Businesses supported by such credit mechanisms would have a profit motive and operate with the requirement for efficiency imposed by a market economy.
The goal would be to broaden the ownership of private corporations so as to make the interests of private industry more synonymous with the public interest and vice versa––while broadening private enterprise capitalism to include everyone in the society. Such policies and programs aimed at broadening productive capital ownership would foster extensive utilization of the most modern and efficient technological innovations and result in the revitalization of American free-enterprise capitalism mirrored in a strong growth-projected economy.
http://campaign2012.washingtonexaminer.com/article/gop-joins-obama-embracing-crony-capitalism/531836
