Tuesday, March 20, 2012

The Foolishness of Centrally Planned Economies

Behold the brazen stupidity -
First Solar is an Arizona-based manufacturer of solar panels. In 2010, the Obama administration awarded the company $16.3 million to expand its factory in Ohio -- a subsidy Democratic Gov. Ted Strickland touted in his failed re-election bid that year.

Five weeks before the 2010 election, Strickland announced more than a million dollars in job training grants to First Solar. The Ohio Department of Development also lent First Solar $5 million, and the state's Air Quality Development Authority gave the company an additional $10 million loan.

After First Solar pocketed this $17.3 million in government grants and $15 million in government loans, Ex-Im entered the scene.

In September 2011, Ex-Im approved $455.7 million in loan guarantees to subsidize the sale of solar panels to two solar farms in Canada. That means if the solar farm ever defaults, the taxpayers pick up the tab, ensuring First Solar gets paid.

But the buyer, in this case, was First Solar.

A small corporation called St. Clair Solar owned the solar farm and was the Canadian company buying First Solar's panels. But St. Clair Solar was a wholly owned subsidiary of First Solar. So, basically, First Solar was shipping its own solar panels from Ohio to a solar farm it owned in Canada, and the U.S. taxpayers were subsidizing this "export."
The Real Effect
Part of the malfunction with "modern" anything is the gross disconnect with mathematics, specifically the equation. (You know, the = sign?) Vast fortunes are spent today soothing itching ears with nonsense that purports to be able to continually defy not only the law of supply and demand, but often the laws of physics as well. These, can we call them anything but foolish, individuals really believe that they can get something for nothing in these situations. And when the formula fails? Additional sums are spent trying to find the hidden culprit that the experts are certain stole their purported gains. After all, it most certainly is not their fault, the model said it was all good.

Well, if Climategate taught us anything, it's that the model is slave to the data and if the data is bad...well, you can draw your own conclusions. With that in mind, let's look at a simple formula.

X=X (Input = output)

If we change one side of the formula, the other must change.

X + 1 = X +1

This, we know to be true. However, planners usually try to sell you garbage like this..

X -1 = X + 1

That is, if you add a person "managing" things, they will do such a wonderful job, they will increase the output. While this idea is premised on a very solid foundation, it is generally taken to an absurd end.For instance, organizing your kitchen will help you find items more quickly. Simply put, indexing your search allows for a significantly faster find. However, organizing the kitchen for 6 years will not yield a new car when a search is executed. Why? Indexing will remove inefficiencies to speed a system up, but it will not create new growth. The savings can be reinvested, but it is not a new creation.

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