Tale of two cities: Markets vs Government

Michael Barone of AEI has a nice post on tale of two cities – Fremont in California and Williston in North Dakota. Both have their own tales of development.

Fremont came to light because of Obama’s push for solar energy:

Near to glamorous Silicon Valley, with lower rents, it seemed the ideal place for what the Obama Democrats were convinced would be the green energy business of the future, the manufacture of solar panels. Just the place for green jobs!

So Fremont is the site of the gleaming headquarters of Solyndra, the solar panel firm promoted by an Obama megacontributor, which got a $535 million loan guarantee from Obama’s stimulus package. But the wave of the future turned out to be a stagnant puddle. Solyndra went bankrupt. Meanwhile, Fremont, like most of coastal California, has had continual outmigration to other states and has grown only due to immigrants. It grew only 6 percent between 2000 and 2011. 

If the Obama folks back in 2009 thought Fremont was the harbinger of America’s future, one wonders what thoughts they had, if any, about Williston, N.D.

However, Williston had a different story:

North Dakota was for many years the state least visited by people from other states, an orderly rural state with about the same population as in 1930. There’s no voter registration because everyone would know if a stranger came in to vote.That changed late in the last decade. Oil companies developed hydraulic fracturing techniques — fracking — that made the Bakken oil commercially valuable. Drilling has been booming, and Williston is the nation’s fastest-growing small city — so fast that it doesn’t have enough housing for the workers pouring in. Williams County grew 23 percent between 2000 and 2011.

This spring North Dakota became the No. 2 oil-producing state, with lots of natural gas production as well. It has the nation’s lowest unemployment rate.

What is the lesson?

This tale of two cities has a moral, which is that no political or governmental leader can forecast the future. Barack Obama and his Nobel Prize-winning energy secretary thought solar panels were a huge growth industry. They bet billions of tax dollars and lost.

True, many private investors guessed no better. But they were risking their own money, not ours. And yes, government research provided some early help in developing fracking.

But Fremont and Williston are more evidence, if any is needed, that the collective decisions of participants in economic markets do a better job of allocating resources than the often contributor-driven decisions of a few politicians.

Williston’s jam-packed motels and trailers don’t look as glamorous as the Solyndra headquarters in Fremont. The weather in North Dakota is seldom as pleasant as the microclimate of the East Bay.

But the Bakken shale is doing much more for America’s economy than the shuttered solar panel plant.

Hmmm. A nice natural experiment…

Also interested in figuring why the solar energy project failed?

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