A123 Goes ChineseBy Bob Lutz
Forbes Magazine, August 8, 2012: A Chinese auto parts company, Wanxiang, has come to the rescue of cash-strapped A123 Systems, an American high-tech lithium-ion battery maker and centerpiece of the Obama administration’s “green jobs” revolution. Wanxiang can acquire up to an 80% of the company in return for an investment of up to $450 million.
The recipient of a $249 million “green technology” grant from our federal government, A123, believing their own (and everyone else’s) hype about the millions of electric vehicles that would soon be filling the nation’s highways (it will happen, but not soon) set about proving an old adage: stupidity and waste increase with the amount of money available. Production capacity was set at a level that was way overly optimistic, and the headquarters complex, with its magnificent office suites and marbled lobbies, was something only a company with tons of money would dream of. But I’m sure the risk seemed low: After all, the “green revolution” was upon us. Even Nancy Pelosi said it was so!
But, as always in this vexing, over-regulated, over-taxed but still-twitching private enterprise system of ours, the marketplace overwhelmingly voted for the speed, range and lower price of conventional cars, even at $4 per gallon. It’s another example of a government-directed “green jobs” initiative which, while environmentally praiseworthy (especially if you believe in manmade global warming), was economically idiotic: when capital is spent on a product for which there is insufficient demand, negative economic value is created and jobs, green or otherwise, are lost. To make matters worse, not only is the capital lost, but, had it not been squandered on green “hope and change,” that same capital could have been spent productively, creating something that the public actually wants and needs.
That’s the real crime of the “green jobs” initiative: it destroys capital that is so badly needed elsewhere to revitalize our economy.