Crony capitalism is alive and well here in the state of Oklahoma. This past week a pharmaceutical company (Selexys) announced a 23 million dollar investment by a venture capital firm, MPM Capital. Furthermore Selexys has given Novartis Pharmaceuticals an exclusive option to buy them later for 665 million. Isn’t this wonderful?
Problem is, much of the original startup money was provided by unwilling taxpayers, state and national. Here is where some of their start up capital came from:
Oklahoma Center for the Advancement of Science and Technology
Oklahoma Applied Research Support Program
Oklahoma Seed Capital Fund (managed by a “not for profit” company that is funded with state tax dollars)
Accelerate Oklahoma! funds from the U.S. Treasury’s State Small Business Credit Initiative program
Small Business Innovation Research grant (federal government)
How about this for a proposition: all of the original investors (mugged taxpayers) should be compensated for their “contribution” of capital should this sale/merger occur. On the contrary, here is the Selexys business plan: taxpayers take all of the risk and private cronies take all of the profit. Of course, they will wrap themselves up in “JOBS!” and that will make their theft OK. ”ECONOMIC IMPACT! will be their other mantra.
This company is Bastiat’s broken window fallacy. We are financially no better off for Selexys’s presence in the community than we are with violent criminals who would rob us at gunpoint in a non-mutually beneficial exchange. We are simply denied our property with nothing to show for it, while the bandit stimulates the economy with confiscated goods. You at least have a chance to defend yourself and your property from a violent criminal! Keeping this in mind, one cannot help but realize that the primary difference between a violent criminal and a crony criminal is that the violent criminal has assumed significant personal risk.
This is not wealth creation. This is wealth transfer. Theft. No one asked you or me if we wanted to invest in Selexys. They just took the money. Where’s our return on investment?
The most outrageous part of this is that state taxpayers actually fund a “not for profit” entity called i2E, that helps companies like Selexys obtain all of the stolen property needed to fund their ideas. i2E picks our pockets to better teach others how to join in. This is pro-business corporate welfare. I prefer a pro-free market approach. Selexys might be a great company, one that might have stood on its own, doing what it needed to do to attract private investors over time. Alas, we will never know, just as we will never know what might have resulted had we been left alone to dispose of our own money as we had seen fit.
G. Keith Smith, M.D.