Sunday, January 29, 2012

How to Grow your Crony Capitalist Business

Wind Capital Group's wind turbines. Photo credit: Paul Hamby

In 2009 the folks at 24thState reported on Tom Carnahan's Wind Capital Group expansion plan:
In light of the news that the Carnahan family wind farm business plans on using $90 million in stimulus and a quarter of billion in loans to build their new project, emails poured in from around the state complaining about the way the company does business.
And the way it does business is a text book examples of how crony capitalism works.

When we think about capitalism and markets we think about supply and demand. In the case of wind power, the Carnahans realized that they needed to manufacture demand. That was done when a November 2008 renewable energy ballot initiative passed in the Show Me State. Over the coming years, the amount of Missouri's energy which must be supplied by renewable sources will gradually climb to 15% in 2021.

With demand manufactured by state fiat and paid for by Missourians in the form of higher energy bills, the Carnahans now have the business justification for building their wind farms. They do not, however, have the capitalist drive to put their own money at risk, so they seek government assistance to finance their new venture.

As the 24thState article at the top indicates, this was done in part by creating an Enhanced Enterprise Zone in Dekalb county. Fast forward to October of 2010 and we learn that the "business" is paying "dividends":
In 2005, Tom Carnahan was a lawyer, and his brother was just elected to Congress. In that time, the company Tom Carnahan formed has given over 100,000 to Democrats, including the campaigns of his brother and sister, as well as to Democratic Party PACS that also give to his brother and sister.
A few days ago, MaryvilleDailyForum.com reported that it was time to expand the supply of Carnahan political donations windmills:
It took about four months longer than predicted, but the Missouri Department of Economic Development has finally approved two Enhanced Enterprise Zones designed to attract wind turbine construction countywide as well as promote various other kinds of industrial growth in the Elmo-Clearmont-Burlington Junction area. 
... 
Wind Capital Group of St. Louis currently operates the county's only wind farm, which consists of twenty-four 2.1-megawatt turbines near Conception. Those machines are not included in either EEZ and are currently assessed at the full tax rate for real property. 
As the MaryvilleDailyForum.com notes, the Enhanced Enterprise Zones reduces the property taxes that Wind Capital has to pay, that means that municipalities will have less tax revenue at their disposal. The article notes that there's a legal dispute between Wind Capital and the DeKalb County Board of Equalization about the market and assessed values of each wind turbine and concludes:

Should Wind Capital prevail, the big losers in Nodaway and elsewhere would likely be rural school districts and small-town fire and rescue units.
While I certainly support smaller government, I do not think that the fat is to be found in rural schools or small-town fire and rescue, but it sure does make sense for the Carnahans to loot those generally Republican-leaning areas of the state to provide seed capital for the next revolution in their business cycle.

h/t: POed Patriot

1 comment:

Bill Hennessy said...

Statists do not and never have given a rat's a** about the poor, the underprivileged, or middle income people. They divide society into two camps: the elite and the serfs.

Russ, Tom, Robin, and Ma Carnahan are elitists. They don't care about America's well being, so long as their comforts are protected.