Gongol.com Archives: December 2010
Brian Gongol

December 16, 2010

Socialism Doesn't Work The giveaways resume
The state of Iowa is giving away a $2.3 million forgivable loan to a startup firm in Ames to encourage them to expand -- and a $2 million forgivable loan to another firm in Cedar Rapids. Supposedly, it's all in the name of "job creation" and "economic development", but one might ask: Why offer a "forgivable loan" instead of taking an equity stake in the firm? The answer is probably because one would say that the government shouldn't take an ownership role in private businesses -- and that would be correct. But if an ownership stake is a bad idea, isn't a forgivable loan -- which costs the same as an equity stake, but comes with exactly zero of the benefits -- an even worse idea? The ridiculous practice of modern "economic development" appears to have next to nothing to do with creating an economic environment in which opportunity is maximized, and everything to do with funneling taxpayers' dollars (at no certain rate of return) to those who are best at asking for a handout. If $2.3 million is chump change, then it's not worth giving away. If it isn't, then why should one private firm get the money and not every other? This approach to "economic development" is costly and delusional.

Business and Finance Venture capital firm piles on the speculation with Twitter
Kleiner Perkins has purchased a share in Twitter for $200 million, which apparently positions the firm at a speculative value of $3.7 billion. The word "speculative" applies here, because there's really no sensible way in which a firm like Twitter is worth the same amount as a firm like Del Monte Foods or H&R Block.

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