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Crony capitalism at its finest

Posted: January 19, 2012 at 4:50 am   /   by

650 Electric Vehicle chargers to be installed in the Valley by firm with ties to prominent Democrats

We’ve already addressed the multitude of reasons why the Chevy Volt is a terrible waste of taxpayer money here.  It may be hard to believe, but it actually gets worse:  the government is also subsidizing infrastructure to support electric vehicles (EV’s), despite the fact that almost nobody uses them.

As part of the stimulus bill, a company called ECOtality was awarded a $100 million grant through the U.S. Department of Energy.  Their project is now worth approximately $230 million, although some of that funding comes from more DoE grants and some of it is via partner matches.

The plan is to have ECOtality deploy 14,000 chargers in 18 major cities and metropolitan areas located in six states and the District of Columbia.  Chevrolet and Nissan North America are partners in The EV Project; owners of the Chevy Volt or Nissan Leaf can sign up to receive an ECOtality residential charger courtesy of Uncle Sam, in addition to the previously-discussed tax breaks and other goodies.

ECOtality is set to install 650 of these Electric Vehicle chargers around the Valley in the coming weeks.  The firm’s founders have some questionable ties to former Democratic Congressman Harry Mitchell, whose son is currently running for mayor of Tempe.

ECOtality CEO and President Jonathan Read took over the company in 2006 and changed its mission from producing biodegradable cleaning products to that of a renewable energy industry company.  Very soon thereafter, he took a sudden interest in Democratic party politics, making large donations ($3,600 total) to Rep. Harry Mitchell.

ECOtality’s current VP of corporate development, Colin Read, was the assistant finance director for Mitchell’s campaign in 2006.  Slade Mead, a member of the company’s board of directors, donated $4,200 to the effort to send Harry Mitchell to Congress.  With the help of ECOtality’s management, Harry Mitchell successfully unseated J.D. Hayworth.

Mitchell then served on the House committees on Science and Technology, as well as Transportation and Infrastructure — both directly related to ECOtality’s business.  It’s unclear whether or not former Rep. Mitchell had anything to do with the company’s receipt of roughly $115 million in stimulus funds, but the situation is extremely suspicious.

Fast forward to 2012, and Americans for Prosperity is ready to roll with their second ad campaign attacking the Obama Administration’s energy policies.  The total value of all of the planned TV and Internet advertising is expected to be around $6 million.  AFP plans to continue attacking Obama’s green energy policies over the course of the election season, and their president Tim Phillips had this to say:

“The president is going to continue this class warfare politics of envy message. Frankly, we wanted to remind citizens across the country that his record is very different.  It’s abusing taxpayer dollars to take care of his big donors, the guys who gave to his campaign.

Of course this is exactly what appears to have happened with the electric vehicle chargers going up all over the Phoenix area.  Well-connected Democratic campaign donors poured their time and money into Harry Mitchell’s Congressional campaign as they set up a company to sell ‘clean’ energy gear to the federal government.

The Obama 2012 campaign’s first TV ad attempts to rebut these type of claims and spin the investments as an effort to reduce America’s dependence on foreign oil.  Obviously they have some polling data saying that Obama’s attempts to play venture capitalist with taxpayer money are negatively perceived by American voters.  This is a very good thing.  If there is ever a time when Americans fail to recognize this kind of Chicago-style corruption and crony capitalism for what it is, we will have “changed” for the worse.



One other problem with this style of governance  is that it decouples decision making power from the impact of consequences.  City councils have to approve the installation of these specific chargers, but they have no interest in rejecting what amounts to a huge donation from the Department of Energy.

Ordinarily if say, Chandler City Council wanted to go forward with building electric car charging stations on public property, they would either have to spend money out of their own budget, levy a new tax, or borrow the funds through the sale of bonds.  There would be a political risk and likely a cost to the officeholders involved, which could possibly be enough to prevent an action like this from ever occurring.  But because Chandler taxpayers see no more consequence from it than taxpayers anywhere else in the country, including the many cities and states with no electric vehicle chargers, it was approved without so much as a peep of dissent from most of the Council.  In fact, despite Chandler’s generally conservative lean, only Vice Mayor Jeff Weninger voted against the installation of the car chargers at huge cost to U.S. taxpayers.

These are very typical and entirely predictable results from an experiment where politicians are given billions of dollars to invest.  Resources will be wasted on ventures there is no market for.  Costco, a private business, has had electric vehicle chargers at some of its locations going back to 2006, and it has begun to remove them due to lack of use.  Most of the money for the projects goes to unproductive firms tie to the people responsible for helping politicians get elected, instead of to companies that can do things cheaply and efficiently.

No matter its partisan source – Republican, Democrat, or Independent – this type of wasteful and corrupt crony capitalism must be opposed if America is to remain open for business.

Correction:  Mark Mitchell is Harry Mitchell’s son, not his brother.  

Editor’s note: Original publication date 1/19; bumped to the top on 1/20

Hannah Thoreson

Hannah Thoreson is a science and technology writer based in northern Virginia. She earned a physics degree from Arizona State University in 2012 and has been causing trouble ever since.

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Crony capitalism at its finest