Say Anything Blog

I’ve written before about the differences between corporatism and capitalism.  Capitalism, or “free markets,” consist of private entrepreneurs competing against one another for profit.  Corporatism, or “crony capitalism,” is rent-seekers seeking to base their enterprises on government assistance either in direct subsidy or in unfair regulatory, legal or tax practices that reward what they’re doing while hurting their competitors.

So when I see an article like this I know this isn’t capitalism.  This isn’t the sort of thing that made America great.  This is corporate rent-seeking at the expense of the taxpayers at a time when they can hardly afford it.

Flow Mobile is a small company with a bold plan to bring the next wave of mobile wireless communications to a large swath of rural America.

The Bismarck-based firm claims to have “game-changing” technology that makes it economically feasible to cover sparsely populated areas of 12 states in the Midwest and West.

The launching pad for Flow Mobile’s proposed wireless network is North Dakota, with a pilot project expected to start soon in Cass County to demonstrate its technology, which has drawn skepticism.

To help build its wireless empire, Flow Mobile has applied for $52 million in federal stimulus grants, including $29.1 million for projects in North Dakota. ...

Gov. John Hoeven wrote a warm letter of support earlier this year offering to have several state public safety agencies use Flow Mobile’s demonstration network – and possibly use state-owned towers and poles for base stations.

Sen. Kent Conrad, D-N.D., wrote two federal agency heads to support Flow Mobile’s request for stimulus grants, which are still pending.

It’s a lengthy article, and the whole thing is worth a read.

Who knew the “stimulus” spending bill was going to amount to little more than a slush fund for the political big wigs?

And there’s a problem here, too.  Flow Mobile is setting up to compete with existing telco’s in North Dakota in developing a wireless broadband emergency communications system for the state.  Meaning, essentially, that our federal tax dollars could be used to subsidize into existence a company that would compete with already existing companies to bid on a state contract for an emergency communications system that would also be funded by our state tax dollars.

Anyone else seeing a problem here?

Throw into the mix Alien Technology, a failed Fargo-based company that was going to “revolutionize” the world with RFID tags.  That business finally closed its doors earlier this year taking with it nearly $8 million in “invested” economic development funds.

Clearly, our government has a pretty poor track record when it comes to picking and choosing winners and losers in the market.  And I think it’s probably because the winners and losers are based not on considerations such as business models and marketability (things private investors would consider) but rather which companies have the best political connections.

Which is the problem with corporatism in the first place, be it government “investing” economic development money or giving out grants of “stimulus” money.  The government is inefficient, sometimes corrupt and prone to value political connections over viable business models.

Our government - state or federal - has no business giving away money to private businesses.  If a business can’t survive without government aid then clearly that business is either poorly managed or offering goods/services the public doesn’t really want.  If a start-up business can’t get private capital to launch, then perhaps it has no business launching in the first place.

That is how free markets work.