Tuesday, April 13, 2010

Adam Smith warned of this… rent seeking scum and govt that supports them….

Peter Geddes in New West (not his heading… I’m just more angry or less polite than he is)

If Congress passes climate change legislation, someone must manufacture and sell products and services to help companies meet lowered carbon emissions targets. With this in mind a friend asked if I saw profitable opportunities. Surely there is money to be made in alternative energy sources like biofuels, wind, and solar? Perhaps arbitraging the CO2 markets is the way to go? While on the surface this seems like a target rich environment, I advise caution to investors considering this arena. Here’s why.

Global warming has created a breeding ground for political capitalists. These are businesses that are expert at manipulating the political process to gain profits they can’t make in the competitive marketplace. The opportunities for political capitalism increase with the size and scope of government. When government allocates resources and imposes constraints it is generally to serve the strong and entrenched; the weak and aspiring suffer. The recent health care reform clearly exemplifies just this sort of mischief.

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