The Vice President and places venture capital won’t go

In an interview in the current issue of Car and Driver magazine, Vice President Biden stated “One role of government is to go where venture capital won't”. As a long time senator (January 1973 to January 2009) Vice President Biden certainly had lots of time to shovel government largess into so-called “investments”. If one views government in a manner similar to the Vice President, sending money where venture capital won’t seems to make sense. But the government doesn’t exist to “invest” in the traditional sense. Proper government shouldn’t assume the role of investor because of the powers of the public fisc and of regulatory legislation. Because the government controls the purse strings of the nation’s finances it commands vast sums and can spend more than a traditional investor. Because of its regulatory powers the government can create a business environment superficially favorable to its “investments” and as a consequence, negative to competitors of those “investments”. This happening is often referred to as the ability of government to pick winners and losers. Selecting whom gets financed on the backs of taxpayers and determining the rules of business is a clear conflict and would be denounced and banned if any private citizen or entity had the same power.

Most worrying, many venture capitalists lose vast sums on many investments, infrequently finding themselves rewarded by capital gains. If venture capital won’t invest in a project it seems logical to conclude that it is not a sound investment. The government “invests” by providing incredibly low interest loans. If the “investment” is not successful the taxpayers are responsible for funds that are never paid back. And if there is a payback (a big if) it is at low interest, the best case being paid back in full with minimal gain. Many government “investments” require constant government favors if they survive, negating any positives. The underlying problem is that the government is not a sober disinterested party. It is made up of people with interests and agendas. They can spend vast sums of money that is not their own based on those interests. This responsibility should be sacrosanct, and “investing” in pet projects unpalatable to the market (as in there is no demand, see Solyndra) is contemptible at best. The productivity of the citizens of this country is so great that the government has more money, taken from that productivity, than sense. This is the crux of the problem, no Vice President Biden; the government should not be “investing” on things nobody wants with money that isn’t theirs.