Top 1%’er Richard Branson advocates for more subsidies to the rich!

Posted on January 22, 2014 by Jeff Haymond

Always for the good of mankind, you see. Milton Friedman used to note that there are always two groups pushing for a public policy: the public front group which was supportive of a particular cause, and the private interest group that would benefit. No one ever advocated for government benefits to enrich themselves, rather there must be a “public interest” rationale offered. In this latest blog post from Mr. Branson over on the Huffington Post, he is concerned over a number of problems:

our planet faces a broad range of enormous challenges. How can we feed an ever-growing global population? What can be done to lift the world’s poor, still well over a billion people, to a higher standard of living and a better life? How can we turn the tide on climate change?

I can’t help but not share much of his concern–at least in these areas. Globalization and free markets are increasing the living standards of the world’s poor, and enabling far greater farm production and agricultural output. The classical economist Thomas Malthus’s fears that population would increase until it starved itself has been overwhelmingly rejected by history. With climate change (conveniently no longer referred to as global warming), the evidence is clear that whatever is really happening with global warming, it is certainly at a much slower pace than predicted by the climate alarmists. So what is Mr. Branson’s solution to these problems?

Challenges exist to be tackled head-on…. As so often, entrepreneurs have a major role to play. The good news is that many are doing it already and at greater scale than ever before. It is one of the reasons why, last June, we launched the B Team, a global group of business leaders which aims to deliver a new way of doing business that prioritizes people and planet alongside profit — a “Plan B” for businesses the world over.

We can all applaud socially responsible business professionals; indeed it is a large part of what our business school is trying to create in our graduates. Yet, it doesn’t end there; after extolling the problems of capital formation for some of the new green energy technologies, Mr. Branson opined that

This also means that the world needs to start a conversation about energy subsidies.

Here is the problem. We are led to believe these are incredibly risky investments that have huge potential payoff, and yet private investors cannot seem to make it happen. Call me skeptical. One thing Wall Street is very good at is raising capital–often too good, for too risky propositions. We see funding readily available for very high risk and long term payoffs in the biotech industry, but with green energy, we have to reconsider subsidies. Here is my thought: failure to generate private sector funding suggests that these investments are not simply too risky, but they are unlikely in the aggregate to pay off. If we increase subsidies for more green energy “investments,” why would would expect the result to be any different from Mr. Obama’s last green energy stimulus fiasco? And if we have reason to expect a different result, what is the rationale that private equity cannot come up with the resources?