Let's say that I want to open a lemonade stand. Having some career experience in business, I first write out a business plan. I go out and find a supply source, perhaps a local fruit co-op, or a local citrus farmer that is willing to sell me lemons at a viable price. I take some of those lemons into my kitchen and I run twenty or thirty batches of lemons through their paces until I've come up with a recipe that I think will sell well. I measure out how many glasses of lemonade a single pitcher will yield. I then decide on a reasonable price that will attract customers, yet still provide me a reasonable profit. I choose my target market and select a location with heavy foot traffic.
I contract with my suppliers, the lease holder of my retail site, go to Costco and buy sugar and cups and plastic spoons in bulk. Then I go down to city hall and procure a business license.
I set up my lemonade stand and find all of my hard work in research and development has paid off. I attract so many customers I find it hard to keep up. The little novelty ice cubes and the touch of lime juice with just a tiny sprinkle of cinnamon has made my product unique and desirable.
As the weeks go by, as the business booms, I realize I'm going to have to expand and hire some workers. And I've already got my eye on two other locations where my business will thrive.
Then one morning I arrive to open my lemonade stand and find that there's another lemonade stand just setting up across the road from me. They've rolled in with a luxury food truck, where the side opens to form a long marble counter and workers are setting up bar stools along the counter. I wander over to say hello and to do a little reconnoitering of my new competitor. The owner of this new lemonade stand says he received a tip from his favorite politician that a lemonade stand would do very well. The politician greased the skids and expedited a business license, brought a commercial vehicle dealer on board to contract for the food truck, greased the skids to get the Department of Agriculture to donate lemons "at cost" and contracted with the local Teamsters Union to deliver the water and lemons. A dozen union members from the Food Workers Union were being dispatched to run the operation.
So I'm a bit overwhelmed. I ask my competitor how he had such luck to get all of the government help. He smiled and said he had contributed to the politicians last election campaign, as had the Teamsters and the Food Workers Union. My new competitor then said he'd be undercutting my lemonade prices by 50%. Since I knew the profit price points for a glass of lemonade I asked just how he planned to do that and make a profit. He smiled and said he was assured of not taking a business loss because his favorite politician had a arranged a $200,000 dollar business grant and extremely favorable loan rates if more was needed.
Well, soon I was watching my lemonade competitor draw away the customers I had courted. In a matter of weeks I was forced to settle my outstanding contracts, close my lemonade business and absorb my business losses. I would not hire any American workers, nor pay taxes to support my community.
Two months later my lemonade competitor also closed his lemonade business. Even after raising his prices after my demise, he couldn't afford to pay unionized Teamsters and Food Workers $25 bucks an hour and yield a lemonade profit as well as footing the high lease costs of his luxury food truck.
I lost. The government backed lemonade vendor lost, and the public lost, no longer able to enjoy the crisp cool taste of lemonade.
Last year Presidential Candidate, and successful businessman Mitt Romney tried to explain why government backed solar companies will result in less solar, not more. But America these days have a lot of kool-aid drinkers who chose to believe the politician, not the businessman. After all, free markets are evil and Big Government is their savior.
And, to date, there are over 50 Green Energy companies, backed by billions in government loans and preferential regulating oversight, who have gone bankrupt. Big Government, but really the tax payer lost billions of dollars. Free market solar companies will no longer risk their capital to build out the industry because they fear having to compete with Big Government. Thus Big Government lost, private business lost, the American worker lost, and America lost the grand opportunity to have clean safe and green energy sources at a reasonable price.
Making lemons from lemonade. Sigh.