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November 13, 2006
Bootlegger Sighting
A belated posting on CA's defeated Prop 87. From the LA Times (11-3-06 via Lex-Nex): Vinod Khosla is crusading for the measure on Tuesday's ballot that would tax oil companies billions of dollars to fund alternative energy development. He says it would be a boon to the environment. But it could also be a boon to his investment portfolio. Khosla, a co-chairman of the campaign to pass Proposition 87 and a $1.1-million donor to the effort, invests in ethanol manufacturing companies poised to claim government grants that would be funded with the new tax. Though he has vowed to give away any profits earned from companies that receive money stemming from the initiative if the measure passes, his situation reflects a trend that alarms advocates of campaign finance reform. Once a means for venture capitalists to pursue philanthropic interests, the bankrolling of citizen initiatives has become a financial opportunity. Their campaigns for government funding of stem cell research and the promotion of cleaner energy technologies could bring billions of dollars in public money to niche technology markets that their firms bet on. The committees created to allocate the money under such initiatives are not obligated to follow the conflict-of-interest restrictions that guide most government agencies. Representatives of start-up firms funded by venture capital companies have seats on those panels, as do some venture capitalists. "You have these very wealthy individuals creating pots of public money that they then play a huge role in doling out," said Ned Wiggelsworth, a policy advocate for Common Cause, an organization that lobbies for campaign finance reform. "I'm skeptical their motives are pure when they stand to profit ... financially." Just to be clear: I think the tax was a terrible idea and am glad it was defeated. Although some supporters' motives may have been personal enrichment, I would not favor Common Cause style limits on campaign contributions. Posted by E. Frank Stephenson at 12:23 PM in Economics
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The statesman who should attempt to direct private people in what manner they ought to employ their capitals would not only load himself with a most unnecessary attention, but assume an authority which could safely be trusted, not only to no single person, but to no council or senate whatever, and which would nowhere be so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it. -Adam Smith
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