The Soviet Union believed in Five Year Plans--central, government plans--to develop the economy of the Soviet Union to reach a prosperous nirvana whilst creating a new order in the world. Government planners would focus the resources of the economy on what was vital and important; resources would be delivered; production targets would be set; and the entire army of Soviet New Socialist Citizens would go to work to transform the USSR from poverty to a socialist paradise.
None can gainsay that every attempt was made, every resource was committed. Yet for nearly one hundred years the Soviet Union was so poor and backward that it did not have enough food for its own people. Millions upon millions died through starvation and its attendant diseases. Ah, but the propaganda machine had a ready series of excuses and explanations.
The most consistent was bad weather. Literally. For just on a hundred years, every year there was bad weather in the Soviet Union which prevented agricultural production targets being met. Can you believe it? What bad luck. The weather gods did not like Koba the Dread.
All centrally planned, command and control economies fail. They devolve into waste, destruction, and ultimately, the degradation of poverty. But every generation breeds its own special brand of idiots who want to try it all over again. The latest crop is currently running the government of the United States. The results are completely as expected. Today, another stellar part of the Central Committees Five Year Plan fell to bits. Another "green energy" company went into bankruptcy.
The company, Ener1, received a $118 million grant from DOE in 2010 as part of the president’s stimulus package. The money, which went to Ener1 subsidiary EnerDel, aimed to promote renewable energy storage battery technology for electrical grid use.
But despite generous federal support for the company, Ener1 was racked by problems last year. In October, NASDAQ delisted the company due to non-compliance with Securities and Exchange Commission filing requirements. A month later, the company’s president, chief executive, and top financial officer were fired. . . .
Ener1 is not the first energy storage technology company to file for Chapter 11 after receiving significant stimulus support. Beacon Power, which manufactures flywheel energy storage technology, received a $43 million loan guarantee from the same stimulus program that funded Solyndra. Despite having used $3 million marked for loan repayment to continue funding its daily operations, Beacon filed for Chapter 11 in November.
Why did this much lionized battery company fail? Did the boss run off with the money? Nothing so prosaic. Just boring economics. There was no demand for the products. The government had built yet another bridge to nowhere or as we say in New Zealand, A Bridge to Erewhon. This from the CEO:
In a statement announcing the company’s bankruptcy, CEO Alex Sorokin said that the company’s business plan was crippled by insufficient consumer demand. “We moved aggressively to reduce costs and shift focus when the marketplace did not evolve as quickly as anticipated. Our business plan was impacted when demand for lithium-ion batteries slowed due to lower-than-expected adoption for electric passenger vehicles,” Sorokin wrote.No-one wanted the things. Oops. That was a slight oversight. But far, far more to the point: every human economy is so complex, so interrelated and interdependent, so dependent upon local motivations and aspirations and knowledge and actions that no central planning agency can ever cope. There is no computer big enough, nor will there ever be. And if there ever were, human beings would strive and conspire to beat it and avoid it and get around it, trying to make money by outsmarting it.
The only economic structure that both persists and works to produce efficiently to the best possible outcomes at the time is one where economic decision making is devolved, not centralised in the hands of bureaucratic experts. But fools, such as now run the US Government, never learn. A hundred blows on the back of a fool makes no impression!
Let's go back a few months. Watch this "promo" video below, where President Obama's Five Year Plan was unveiled to the nation. Note all the nationalistic central planning adages and slogans. Observe the implicit utopianism. Then watch Biden's grease-balling at the company (warning: you may face an involuntary urge to disembogue from your gut.)
The irony is this: if the US does not utterly reject a government planned, command and control economy it will indeed set up the future for the United States. But not as they hoped. There will be a ton of excuses along the way to explain the failures like those of Ener 1--we will name them now: Congress, Republicans, millionaires, the "Top One Percent", racism, gun owners, ignorance. All these excuses will wear thin, eventually. Finally, the ultimate excuse will be trotted out as rising economic despite grips the land like a perpetual winter storm. Americans will be told the real cause of despite will be bad weather, every year, all the time. Social justice, central planning style.
It is always the last refuge of the intellectually and morally bankrupt Central Planner.
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