4 Oct

At least when a pirate takes your money, you know its going to create real jobs in the rum industry…[Reader Post]

                                       

How much do you earn per year? $25,000? $75,000? How about $150,000? Maybe a bit more, maybe a bit less. Whatever you earn, you probably wish your check was just a little bit bigger.

Many of us look at guys like Alex Rodriguez earning $30 million a year or Johnny Depp earning $50 million or Larry Ellison earning $130 million and wish we could exchange paychecks with them. But then of course we’d have to do what they do in exchange for those paychecks, something which most of us are unlikely to be able to accomplish. That is of course the beauty of free markets, where what you earn is relative to not just the value you bring to an organization, but the relative scarcity of potential replacements who can provide that same value. Take as an example a fireman. Firemen do things that everyone values. When you are standing there and your house is burning down, you value what a fireman does more than anything Angelina Jolie, Bill Gates or Dr. Dre will ever do. Let’s say the average fireman makes $45,000 a year in salary and benefits. Does Johnny Depp’s $50 million compensation mean that his job is 1,000 times more important than the fireman’s? No. The difference is that while Johnny Depp is one of only a handful of actors who can almost guarantee to make a $150 million movie into a blockbuster, there are tens of thousands of people who can and will train to become firemen. Although Hollywood is full of actors who might be willing play the role of Jack Sparrow, the discount DVD bin at Wal-Mart demonstrates clearly why Disney was willing to pay Depp tens of millions of dollars to reprise his role.

In a free market, as what someone earns is largely determined by the value they bring to whoever is writing the check, and how many other people can provide that same value, people can do a variety of things to increase their income by increasing the value they bring to their employer. They can get more or a better education. They can train at their craft to become more skilled. They can learn more skills so they can bring value in other areas.

Wherever your skills, education and efforts have landed you, you probably feel like you work pretty hard and earn your paycheck. Now imagine on having a job paying $95,000? That sounds pretty good. Now imagine that in exchange for that $95,000 you don’t have to actually do anything. Well that was the case with Solyndra. Not that the employees weren’t working hard and trying to create a successful company, they very well might have been. The problem is that the business they were in was simply not sustainable. As is seemingly always the case with “green jobs” everywhere, they can’t survive even the most basic elements of a competitive marketplace. Of course if an investor wants to put their money there, that’s their right. Invest in something you think has legs. Maybe you’re right, maybe you’re wrong. Give it a shot. That’s how free market capitalism works.

Unfortunately however, that’s not what happened at Solyndra. The Obama Administration decided that American taxpayers should tip the scales by putting up half a billion dollars for a company that spent $6 to manufacture a solar panel that it could then turn around and sell for $3. A four year old would recognize that was a recipe for disaster. Even a few people in the Administration saw that there might be a problem. Not only did they know it was problematic before they gave the guarantees, but they had to bend the rules half way through to let the company take all of the money guaranteed even after Solyndra failed to make it’s required payments.

Just in case you think the Administration was chastened and might have learned from its mistakes, think again. Just last week the DOE handed out another $5 billion in loan guarantees to other “green jobs” companies – one of whom is owned by Nancy Pelosi’s brother in law. In the case of one of those projects, the Crescent Dunes Solar Energy Project, the Obama Administration officials signed off on $737 million in loan guarantees for a project that will result in 600 construction jobs and 45 permanent jobs. That works out to $1.245 million per temporary job or $16,600,000 per permanent job. Those numbers are getting up into the Matt Damon pay range. Of course that’s not what those workers are going to be paid, but if Solyndra is anything to go by, they will be earning $100,000 or so per year. Good for them. I’m happy to see anyone earn whatever they can earn. The problem is, however, that the companies paying their salaries are not viable entities. They can’t survive without government support. And government support doesn’t come out of thin air. It comes out of your pocket in the form of taxes. Imagine if the government weren’t wasting these billions of dollars… your $75,000 paycheck might look like $80,000. Who would you rather have that extra $5,000 per year, you and your family or the people running the next failing “green jobs” basket case?

If the American people want to spend $5 billion investing in the future, I’d suggest they follow the path laid out by PayPal founder Peter Thiel rather than the one crafted by community organizer Barack Obama – i.e. more taxes and more money to floundering green companies. Thiel is paying a handful of students $100,000 to drop out of college and spend two years becoming entrepreneurs. They get a guaranteed paycheck, they get mentoring from Thiel and others in the venture capital world, but most importantly, they spend their time seeking to create, invent and develop technologies or products or services that will change the world.

To put this is perspective, the typical VC investment scenario plays out as follows: They lose money on seven out of ten investments. They break even on two out of ten. One of the ten is sufficiently successful that it not only pays back everything that was invested in it, but it covers the losses of the seven and makes money on the whole project.

If that kind of an approach were applied to the money the DOE is throwing down the “green jobs” ratholes, at least we’d have a chance to recoup our money and maybe find a technology that could actually survive in the marketplace… Of course the best thing to do would be to get the government out of the “investing” business all together, and let you keep your money. That $5 billion giveaway to the greenies works out to about $16 per person. If you had it back you might be able to go and see the latest Johnny Depp movie and help the studio pay his hefty salary. You might even have enough left over for a bucket of popcorn.

About Vince

The product of a military family, growing up in Naples, Italy and Guantanamo Bay, Cuba, and being stationed in Germany for two years while in the Army, Vince spent half of his first quarter century seeing the US from outside of its own borders. That perspective, along with a French wife and two decades as a struggling entrepreneur have only fueled an appreciation for freedom and the fundamental greatness of the gifts our forefathers left us.
This entry was posted in Barack Obama, Class Warfare, Economy, Entertainment, Politics and tagged , , , , , , . Bookmark the permalink. Tuesday, October 4th, 2011 at 5:00 am
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6 Responses to At least when a pirate takes your money, you know its going to create real jobs in the rum industry…[Reader Post]

  1. Skookum says: 1

    Good article Vince, but you miss a point concerning Solyndra. They had to build a new plant when 11% of the industrial buildings in the area are vacant. They built a spa for employees to relax and paid to install Disney cartoon songs to be played continuously in their robots. These are all sensible investments that are made by companies struggling to show a profit. What could have gone wrong, they built an extreme state of the art factory to make panels that the Chinese could make at a pittance, claiming it was justified because they were using new technologies and then the world yawned and the American taxpayer took it in the shorts.

    The cartoon is priceless!

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  2. Nan G says: 2

    Solyndra is merely the poster boy of green job debacles.
    The National Renewable Energy Lab (NREL)in Golden, Colorado, announced a plan to lay off roughly 10 percent of its staff through a voluntary buy-out plan.

    According to the Denver Post, the lab plans to eliminate between 100 and 150 of its 1,350 jobs.

    The Obama administration supported the NREL in 2009 with roughly $200 million in stimulus grants.

    $200,000,000/2 years= $100,000,000/year.
    $100,000,000/1,000 employees= $100,000/year apiece.
    Of course they didn’t each get that much, and now 100 to 150 of them are out of work.

    Anyway, they aren’t a totally ”green” company.
    All they do is research for the DOE.
    They don’t make anything at all.
    And they blame Congress for their layoffs.
    Obama bumped up their funding 64% since taking office.
    Part of his promise of adding 5 million ”green jobs” from when Obama was a candidate.

    But Obama redefines some jobs as ”green,” like all of the NREL’s jobs, as a way to pad his green jobs success meme.
    Bus drivers whose buses run on alternate fuels have all been reclassified as ”green job holders,” by Obama.

    ReplyReply
  3. Buffalobob says: 3

    From Power line. “The smart is Harold Hamm, the founder and CEO of Continental Resources and one of America’s richest men. Hamm is one of the primary developers of the Bakken oil fields; he estimates that they contain 24 billion barrels of oil. The dumb is Barack Obama. The Wall Street Journal describes Hamm’s meeting with Obama:”
    When it was Mr. Hamm’s turn to talk briefly with President Obama, “I told him of the revolution in the oil and gas industry and how we have the capacity to produce enough oil to enable America to replace OPEC. I wanted to make sure he knew about this.”
    The president’s reaction? “He turned to me and said, ‘Oil and gas will be important for the next few years. But we need to go on to green and alternative energy. [Energy] Secretary [Steven] Chu has assured me that within five years, we can have a battery developed that will make a car with the equivalent of 130 miles per gallon.’” Mr. Hamm holds his head in his hands and says, “Even if you believed that, why would you want to stop oil and gas development? It was pretty disappointing.”
    My comment, why would obama’s reaction surprise you? This community organizer/affirmative action recipient has been feed BS all his life. Hell if Chu told him that a perpetual motion device is possible with just the right amount of Federal money, he would say ah, ah well ok let’s go for it, it’s green,

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  4. anticsrocks says: 4

    Excellent article, Vince.

    @Buffalobob: Obama is as much of a drone as the drones who fall all over themselves for him.

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  5. FAITH7 says: 5

    I am so sick of all this “Green” Ponzi Scheme – Crony Capitalism crap…the only “Green” I want to see is in me getting to Keep more of ‘my’ Green [Paycheck] damn it!….. Oh, and the trees and plants outside….

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  6. Nan G says: 6

    ABC News is reporting that Republicans have a realistic alternative to the Obama/Buffett tax increase;
    Voluntary ‘Tax Me More’ Check Box on IRS Form

    …..
    Rep. Steve Scalise, R-La., proposed his own solution to billionaire Warren Buffett’s complaints that he paid a lower tax rate than his secretary.

    Scalise said he plans to submit a bill Wednesday night that would add a line to the 1040 tax form allowing people who feel they do not pay enough income tax to opt-in to paying more.

    “I wanted to make sure that there was an option out there on the IRS tax form for those out there who wanted to send more of their money into Washington to help pay down the deficit,” Scalise said. “It’s an idea that solves a few problems and ensures that taxes won’t be raised on America’s job creators.”

    Scalise said his bill will allow Buffett to “put his money where his mouth is” and “send in a check” to the U.S. Treasury.
    ……

    For years you have been able to add extra to your tax payment.
    Very few ever do.
    Very little is collected that way.
    So, Limousine Liberals: put your money where your mouth is!

    ReplyReply

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