Failure of Salina: Don't test the Markets

A salinas car company was being subsidized by the city of Salinas, periodically giving batches of taxpayer money equivalent consistently over $100,000. Mike Ryan, the President and Co-Founder has said that the money is all gone and that the company has lost its investors. In other words, the project in making some fo the most eco friendly cars completely failed. Though the likes of Ryan should be applauded by tackling this problem head on, it should be no surprise that the real loser in this experiment was the tax payer.

The markets appear to not have convinced the investors that this new eco friendly car would be as prosperous as they thought. The foolhardy investments of the city clearly demonstrates that the city does not know what is best for its inhabitants and that instead they should be given the opportunity to invest where they think is proper instead of letting city officials do what they want without bearing any consequences. If this is not a clear example of the broken window fallacy in practice, i have no idea what is. To backtrack, this philosophical tenet basically states that despite the fact that a job is created when a window is destroyed thus employing someone, it does not validate the action of breaking the window because wealth was destroyed and even more wealth is needed to restore it instead of being used elsewhere where which society can continually benefit. In this case, the city used up money that could have been used in creating more jobs in a dangerous recession. Unfortunately, that particualr money and opportunity is lost to history.