In 2005 the allegedly Republican governor of Texas, Rick Perry, requested the creation of the
Texas Emerging Technology Fund, which called for $200 million to be spent on various projects that the politicians in Austin deemed to be really neat high-tech ideas. In order to secure funding, the projects had to hold out the promise of either:
- The creation of high quality new jobs, immediately or over a longer period, in the state if tied to emerging technology; or
- The potential to result in a medical or scientific breakthrough.
Earlier this year, the state of Texas decided that NanoCoolers, Inc. met the strict requirements of the Emerging Technology Fund and cut the company a $3 million check to aid in its development of a thermoelectric semiconductor cooling system. Yesterday the Dallas Morning News reported that NanoCoolers is going out of business.
The article itself is fascinating for a number of reasons. In the text, the AP states that “It was announced in March that NanoCoolers would be receiving the taxpayer-funded money” (italics mine). This struck me as odd, since I did not notice the Dallas Morning News emphasizing the impact on taxpayers when Prop 15 was being discussed in October. For example, a typical article on Prop 15 does not mention the taxpayer at all, despite describing virtually every other detail associated with the plan. Instead, Prop 15 is constantly referred to as “an investment,” funded by “the state” or “the Federal government.” I could have sworn the taxpayer would have factored in there somewhere, but apparently state and federal governments are funded by Santa Claus or the Easter Bunny whenever the money goes to projects of which the Dallas Morning News approves. If, on the other hand, the money goes to semi-private firms or is disbursed by a Republican governor, the press wants to make sure the reader knows exactly who’s paying the bill.
The failure of NanoCoolers offered Texas Democrats a crack at Rick Perry, saying the closure proves “that his slush funds need more accountability.” A Perry spokeswoman countered, saying programs such as the Emerging Technology Fund have helped make Texas “one of the best places in the nation to do business.”
And of course, everyone involved in this story completely misses the point. The real issue is that the state of Texas has no right to spend taxpayer money to subsidize any business, whether high-tech, low-tech, or no-tech. Aside from the moral hazard this creates, the simple fact is that government bureaucrats cannot out-guess the market and have no business trying to dictate winners and losers in the private sector. The fact that NanoCoolers is closing its doors despite $3 million in taxpayer largesse should come as no surprise.
Unfortunately, this kind of thing is nothing new to Texas. In 1987, Section 49-g was added to Article 3 of the Texas state constitution to create a super-collider fund. The act was repealed ten years and a billion dollars later, but we still have about a mile of tunnel running underneath central Texas somewhere. The only things colliding in there now are bats. And of course the most recent example of this kind of nonsense is Prop 15, which I have discussed in detail already. I won’t go into it further, but I will note that these kinds of initiatives make the Texas Constitution read as though it were written in Brussels.
It’s tempting to simply shrug one’s shoulders and imagine that these projects must be what the Texas taxpayers wanted, but that’s actually not the case at all. Although all grand government projects have their supporters, the fact that they are secured by political means is proof that the taxpayers didn’t want them. If they had, individuals acting in the private sector could have simply written business plans and raised the needed capital on a voluntary basis. And since any government subsidy redirects the taxpayers’ funds to less-desired goods, the wealth of society as a whole is necessarily diminished by such expenditures.
Here’s something else to consider. Texas has a population of roughly 23.5 million people, 12.3 million of whom are registered to vote. In the recent 2007 election, voter turnout state-wide was 8.64%. Prop 15 passed with 61% of the vote. This means that less than 3% of Texans were able to dictate that 100% of Texans cough up $3 billion to fund a particular charity that just happened to have political influence.
Majority rule may be a great way to decide what movie to see Friday night, or whether you and your buddies want deep-dish or thin crust. But when it comes to spending other people’s money, it seems to fall apart on both ethical and practical grounds. Perhaps it would be best to leave those kinds of questions to the free market, and allow individuals to decide for themselves how to dispose of their property. After all, they earned it.
In 2005 the allegedly Republican governor of Texas, Rick Perry, requested the creation of the Texas Emerging Technology Fund, which called for $200 million to be spent on various projects that the politicians in Austin deemed to be really neat high-tech ideas. In order to secure funding, the projects had to hold out the promise of either:
