Horowitz: The invisible hand behind the Silicon Valley Bank bailout? Green energy venture socialism

Venture capital is a risky and rewarding business that, in a world of Adam Smith’s free market, would accurately predict, in most cases, the most efficient investments for creation of wealth and the betterment of human life. Venture socialism, on the other hand, shields investors in start-ups from all risk by funding their projects with both monetary and fiscal stimulus from the government. Now, those counting on taxpayer funding to augment their personal wealth portfolios know that green energy start-ups are “too big to fail,” just like the big banks in 2008. That is the enduring lesson of the SVB “don’t call it a” bailout.

SVB is not just any random bank of well-connected elites in Silicon Valley. In the words of Leah Ellis, CEO and co-founder of green energy company Sublime Systems, “It was the go-to bank for clean tech start-ups.” In fact, 62% of all solar projects in America were financed through SVB. That gives us a glimpse into why SVB was the first to fall in the latest banking crisis and why the federal government has gone all in for it.

Venture capital is built on the principle that if a start-up only had the requisite capital to get off the ground, its success would not only be able to keep it afloat without further help, but it would spawn a rising tide of its own in the economy and serve as an engine for ingenuity, wealth creation, and prosperity, bettering the lives of consumers and producers alike. Green energy venture socialism, on the other hand, is the opposite. Its product is inherently expensive and inefficient and relies on many other natural materials (yes, including fossil fuels) to make it work. Without government subsidies, regulation of competitors, and generally talking down fossil fuels, the venture could not succeed in a free market. Nobody can deny this point.

Now with the collapse of SVB, the Washington Post provides us with a teachable lesson of the moral hazard of taxpayer-coerced funding of venture socialism and the complete sense of entitlement of its practitioners:

Clean tech firms and venture capital funds are assessing how to move forward following what for some of them was the most challenging week in their existence. About half the start-ups working to develop and scale up the newest clean energy technologies were banking with the failed institution, investors and analysts say. Some had just closed new funding rounds days before the collapse and were locked out of the accounts where the millions of dollars in investment was deposited.

Say what? About half of all green energy start-ups were with this bank? Why would they venture over to this one bank?

“Silicon Valley Bank was also instrumental in helping launch community solar projects, providing complicated loans to small developments that more mainstream banks found too cumbersome to fund.”

Isn’t that a mouthful? Complicated loans that are too cumbersome for other banks to fund?! Indeed, it is quite complicated to fund products the free market would never find sustainable. So how do they do it? Not with their own capital, but like all good venture socialists, they use taxpayer funding – either in the form of government tax revenue or Federal Reserve printing presses that induce painful inflation.

“Investors are hoping the infusion of hundreds of billions of dollars in public money from the Inflation Reduction Act will blunt the fallout from the bank collapse, quickly restoring confidence in the clean tech market.”

No kidding! $400 billion in federal green energy funding goes along way. But it has now created a circuitous cycle of failure. The printed money has caused so much inflation that it forced the Federal Reserve to raise interest rates, thus harming the banks that overextended themselves during the period of time (which they thought was indefinite) of low interest rates. So which banks will get hit hardest? The ones with the most uneconomic, insolvent loans – the ones built on the government printing presses to begin with!

Yet now the message has been propagated to all green energy socialists that the government will always be there for them to bail them out on the taxpayers’ dime, which is increasingly worth less. According to the latest CPI report, home and food prices rose 10.2%, electricity is up 12.9%, and gasoline for home use is up 14.3% year over year through February. We are all paying thousands more on vital goods so some wealthy elitist who couldn’t peddle his solar panels for pennies on the dollar in an unfettered market can get rich and then get bailed out when his venture (on our dime) fails.

The Post continues with the sob stories of what would have happened without the Federal Reserve actions on Sunday:

Whit Fulton said he burst into tears Sunday night when he learned the federal government would be covering the money his small Philadelphia solar-tech company had in Silicon Valley Bank. The start-up, called ConnectDER, had been working for a year to secure $40 million for technology that makes it easier to meter use of solar energy at residences. The money finally came through Wednesday night and was deposited into Silicon Valley Bank.

Two days later, that and all the rest of the company’s money looked like it could be gone. “When word came down we were made whole, I walked through the rain for an hour weeping tears of relief,” Fulton said.

Should we feel bad for someone like Fulton? Without the government’s war on natural energy, endless regulations, and infinite subsidies, there would be no need, much less any opportunity for his product. Without near-zero interest rates for lending, he could never get financing for his projects. And without government mandates on the people to use his garbage products, along with collusion between government and the big banks to block financing for real energy products (even at higher rates), his ideas would never get off the ground. In fact, his ideas would never have been germinated in the human mind.

Consider the fact that SVB was financing 1,600 projects that are based on a nonexistent problem fabricated by government. That is a greater subsidy than even direct payments – on par with the market force of the government saying you need to get Pfizer’s or Moderna’s latest vaccine to live a functioning life. Those policies have harmed the quality of life for consumers and have made them bear the brunt of inflation. Now, in order to bail out those products that couldn’t even succeed with the initial government tailwinds, the taxpayers will have to suffer even more inflation – all for a lie.

Lenin is purported to have said, “When it comes time to hang the capitalists, they will vie with each other for the rope contract.” Well, when it comes time to hang the last green socialist, they will vie with each other for the government’s stolen money from taxpayers to supply the rope that doesn’t actually work. Indeed, venture socialists are the smartest among us.