On the first night of the 2024 Democratic National Convention (DNC), speakers assembled to make the case for Vice President Kamala Harris to be America's next president and to provide a glimpse of what policies she might pursue. Unfortunately, it's clear that industrial policy is likely to survive and thrive in a Harris administration, despite clear examples that giving public money to private companies carries significant risk.

Some speakers took shots at former President Donald Trump, with Shawn Fain, president of the United Auto Workers (UAW), invoking the closure of a General Motors (G.M.) plant in Lordstown, Ohio. G.M. shuttered the factory in March 2019 amid slowing sales; in July 2017, Trump had told supporters in Youngstown, "Don't move. Don't sell your house," because lost factory jobs would come back.

"Trump lied, and abandoned Lordstown," intoned the announcer of a video that played before Fain took the stage. "The G.M. factory in Lordstown did close, putting thousands of people out of work, because Donald Trump doesn't care about our communities."

"In 2023, who helped bring jobs back to Lordstown, Ohio?" Fain asked during his speech. "Kamala Harris!"

But it's worth noting that G.M. closed the factory just a decade after it received $60 million from the state of Ohio to operate the facility until at least 2039. When G.M. reneged on the deal barely 10 years later, Ohio chose to let the company keep $20 million.

Then between 2019 and 2023, the factory had another occupant: Lordstown Motors, an automaker that planned to build electric pickup trucks. The brand new company purchased the factory for $20 million after borrowing $40 million from G.M. Ohio officials, having not learned a lesson from the experience with G.M., gave Lordstown Motors $24.5 million in grants and tax credits.

And yet despite all the financial assistance, Lordstown Motors entered bankruptcy in June 2023.

"Today, tens of thousands of auto jobs are returning to the United States, thanks to the policies of the Biden-Harris administration," Fain said in a UAW video released last week. "That includes jobs in Lordstown, Ohio, where auto workers at Ultium Cells are now building batteries for General Motors."

Ultium is G.M.'s electric vehicle battery cell technology. "Ultium's Lordstown plant could qualify for tax credits worth more than $1 billion a year," according to a 2023 UAW report. And in 2022, the U.S. Department of Energy announced that it would loan the company $2.5 billion to build three factories, including the one in Ohio.

Ultium is also building a $2.6-billion factory in nearby Michigan, for which that state's government agreed to give the company $666 million. And Ultium was not the only company singled out at the convention.

"Trump talked big about bringing back manufacturing jobs, but you know who actually did it? President Joe Biden and Vice President Kamala Harris," New York Gov. Kathy Hochul said, moments after Fain spoke. "Look no further than the city of Syracuse, where a company called Micron is building a $100-billion microchip factory with union labor."

In October 2022, Micron pledged to spend $20 billion by the end of the decade to build what it deemed "the largest semiconductor fabrication facility in the history of the United States," signifying "the largest private investment in New York state history." The company further noted that it "intends to invest up to $100 billion over the next 20-plus years."

But the Biden administration agreed to award that company $6.1 billion in federal handouts for its Syracuse factory and one near Boise, Idaho. New York promised another $5.5 billion in state incentives.

Of course, it's entirely likely that these deals will be every bit as lucrative as promised: Micron alone promises that its Syracuse factory will "create nearly 50,000 New York jobs, including approximately 9,000 high paying Micron jobs." But at the time of this writing, Micron has a market cap of $118 billion, suggesting that it could've made the initial $20-billion investment without state and federal taxpayers picking up so much of the tab. Similarly, even though G.M. currently has a market cap of $52 billion and it has reneged on an economic development deal in the very recent past, it still continues to benefit from public cash.

With three more nights to go, the DNC will likely feature more policy proposals for a potential Harris administration. Unfortunately, the first night indicated that industrial policy is alive and well in the Democratic Party.

The post Industrial Policy Is Alive and Well at the Democratic National Convention appeared first on Reason.com.

VinFast, a Vietnamese automaker that builds electric vehicles, announced in July that it would not begin production at its North Carolina plant for another four years. While the news is certainly a setback, the disappointment is compounded by the fact that the state is trying to bulldoze a number of private homes, and a church, to make the project happen.

In March 2022, North Carolina Gov. Roy Cooper announced that VinFast would build its first North American plant in Chatham County. The company would spend $4 billion and create 7,500 jobs, with production from the completed factory set to begin in July 2024. At its peak, the facility would be capable of producing 150,000 vehicles per year.

In exchange, North Carolina lawmakers agreed to give the company $1.25 billion in incentives, including $450 million for infrastructure, including "roadway improvements" and building out the water and sewer capacity; $400 million from the county; and a $316 million state grant paid out over 32 years, linked to the company's job creation promises. In effect, North Carolina taxpayers would be financing over 30 percent of the project.

President Joe Biden called the project "the latest example of my economic strategy at work." CNBC lauded the state's Democratic governor and Republican Legislature for "managing to put aside their very deep political divisions to boost business and the economy" when it named North Carolina America's Top State for Business.

But within two years, the deal was on shaky ground. The company announced in March 2023 that it would not be able to begin production at the factory until at least 2025 "because we need more time to complete administrative procedures," according to a company spokesperson.

Then in July 2024, in a press release about manufacturing output in the previous quarter, VinFast announced that it had "made the strategic decision to adjust the timeline for the launch of its North Carolina manufacturing facility, which is now expected to begin production in 2028," in order to "optimize its capital allocation and manage its short-term spending more effectively."

While this is disappointing news for many—company executives, shareholders, North Carolina state officials—it's worse for residents in the area.

Many of the state and county incentives are dependent upon VinFast meeting certain metrics: While the state doled out $125 million to reimburse the company for site preparation costs, it can claw back that entire amount if VinFast fails to hire at least 3,875 people—just over 50 percent of the required total. There are further clawback provisions if it doesn't hire at least 6,000 people and doesn't invest at least $2 billion into the project.

But even if the deal falls apart and the state gets its money back, some things can't be undone. As part of the deal, the North Carolina Department of Transportation (NCDOT) would conduct "roadway improvements" at the future site of the facility. As detailed in an August 2022 project overview, "private property is needed to construct the improvements proposed by the roadway project." And while the NCDOT "works to minimize impacts such as the number of homes and businesses displaced by a road project, some impacts are unavoidable."

In total, the state expected that the roadwork would "impact" five businesses, 27 homes, and Merry Oaks Baptist Church, which had stood since 1888. This meant the state was authorized to purchase the properties from the owners—or if the owners refused to sell, the state could simply take the properties through eminent domain.

Eminent domain, authorized by the Takings Clause of the Fifth Amendment, allows government entities to seize private property for public use, as long as the owner receives "just compensation." Of course, the only thing that separates this from a normal real estate transaction is that the use of eminent domain implies that the property owner did not want to sell but was forced to anyway.

While an electric car factory does not qualify as a "public use," the state is planning to bulldoze the houses, businesses, and church to make way for a new roadway interchange that will accommodate traffic to and from the site. Of course, under the U.S. Supreme Court's 2005 decision in Kelo v. New London, the state would also have been justified to seize property to give to a purely private party, with Justice John Paul Stevens writing that "there is no basis for exempting economic development from our traditionally broad understanding of public purpose."

In fact, that seems to be just what happened: In July, after VinFast announced its latest delay, the Raleigh News & Observer reported that so far the state had spent $96 million—nearly all of it on site preparation and infrastructure—and purchased four homes, with negotiations ongoing with other homeowners and two businesses. And sadly, "North Carolina has acquired two businesses and Merry Oaks Baptist Church through eminent domain, meaning negotiations fell short and the state took over the land after paying the previous owners fair market values assessed by a state-approved appraiser."

In July 2023, VinFast offered to donate up to three acres of land from its 2,000-acre parcel to Merry Oaks Baptist Church so the congregation could relocate. But a better solution would have been for VinFast to simply shoulder the burden of development in the first place, first by footing the bill for the project itself and then by obtaining land where the government did not forcibly remove any obstacles in the way.

The post VinFast Delays Production After North Carolina Seizes Property for Factory Site appeared first on Reason.com.

Robert F. Kennedy Jr. won applause at the Libertarian National Convention by criticizing government lockdowns and deficit spending, and saying America shouldn't police the world.

It made me want to interview him. This month, I did.

He said intelligent things about America's growing debt:

"President Trump said that he was going to balance the budget and instead he (increased the debt more) than every president in United States history—$8 trillion. President Biden is on track now to beat him."

It's good to hear a candidate actually talk about our debt.

"When the debt is this large…you have to cut dramatically, and I'm going to do that," he says.

But looking at his campaign promises, I don't see it.

He promises "affordable" housing via a federal program backing 3 percent mortgages.

"Imagine that you had a rich uncle who was willing to cosign your mortgage!" gushes his campaign ad. "I'm going to make Uncle Sam that rich uncle!"

I point out that such giveaways won't reduce our debt.

"That's not a giveaway," Kennedy replies. "Every dollar that I spend as president is going to go toward building our economy."

That's big government nonsense, like his other claim: "Every million dollars we spend on child care creates 22 jobs!"

Give me a break.

When I pressed him about specific cuts, Kennedy says, "I'll cut the military in half…cut it to about $500 billion….We are not the policemen of the world."

"Stop giving any money to Ukraine?" I ask.

"Negotiate a peace," Kennedy replies. "Biden has never talked to Putin about this, and it's criminal."

He never answered whether he'd give money to Ukraine. He did answer about Israel.

"Yes, of course we should,"

"[Since] you don't want to cut this spending, what would you cut?"

"Israel spending is rather minor," he responds. "I'm going to pick the most wasteful programs, put them all in one bill, and send them to Congress with an up and down vote."

Of course, Congress would just vote it down.

Kennedy's proposed cuts would hardly slow down our path to bankruptcy. Especially since he also wants new spending that activists pretend will reduce climate change.

At a concert years ago, he smeared "crisis" skeptics like me, who believe we can adjust to climate change, screaming at the audience, "Next time you see John Stossel and [others]… these flat-earthers, these corporate toadies—lying to you. This is treason, and we need to start treating them now as traitors!"

Now, sitting with him, I ask, "You want to have me executed for treason?"

"That statement," he replies, "it's not a statement that I would make today….Climate is existential. I think it's human-caused climate change. But I don't insist other people believe that. I'm arguing for free markets and then the lowest cost providers should prevail in the marketplace….We should end all subsidies and let the market dictate."

That sounds good: "Let the market dictate."

But wait, Kennedy makes money from solar farms backed by government guaranteed loans. He "leaned on his contacts in the Obama administration to secure a $1.6 billion loan guarantee," wrote The New York Times.

"Why should you get a government subsidy?" I ask.

"If you're creating a new industry," he replies, "you're competing with the Chinese. You want the United States to own pieces of that industry."

I suppose that means his government would subsidize every industry leftists like.

Yet when a wind farm company proposed building one near his family's home, he opposed it.

"Seems hypocritical," I say.

"We're exterminating the right whale in the North Atlantic through these wind farms!" he replies.

I think he was more honest years ago, when he complained that "turbines…would be seen from Cape Cod, Martha's Vineyard… Nantucket….[They] will steal the stars and nighttime views."

Kennedy was once a Democrat, but now Democrats sue to keep him off ballots. Former Clinton Labor Secretary Robert Reich calls him a "dangerous nutcase."

Kennedy complains that Reich won't debate him.

"Nobody will," he says. "They won't have me on any of their networks."

Well, obviously, I will.

I especially wanted to confront him about vaccines.

In a future column, Stossel TV will post more from our hourlong discussion.

COPYRIGHT 2024 BY JFS PRODUCTIONS INC.

The post RFK Jr. Pays Lip Service to the Debt While Pushing Policies That Would Increase It appeared first on Reason.com.

Luxury electric automaker Rivian made several big announcements this week related to its expanding product line. At the same time, though, the company announced that it would pause construction on a factory in Georgia that received some of the most generous taxpayer-funded incentives in state history.

On Thursday, Rivian unveiled three new vehicles that will be available in the coming years. The company already offers the R1T and R1S, a luxury truck and SUV, respectively, which start at $70,000–$75,000 and can cost $100,000 or more. CEO R.J. Scaringe announced the R2, a smaller and more modest SUV that would be available in 2026 with prices starting at $45,000, as well as the R3 and R3X crossovers, also expected to be less expensive than the R1 series.

As Reason has documented, Rivian went public in November 2021, promising luxury electric vehicles that would be both stylish and rugged. The following month, the company—which only had a single factory in Illinois—struck a deal to build its second factory in Georgia: Rivian would spend $5 billion on the factory, and in exchange, Georgia state and local governments authorized up to $1.5 billion in tax credits and incentives.

In the years since, however, the company has struggled. In May 2023, Bloomberg reported that the company had lost 93 percent of its share value, and its market cap reflected "almost no value beyond the company's cash hoard." In the fourth quarter of 2023, the company lost $43,372 on each vehicle sold, up from a $30,648 per-vehicle loss in the third quarter.

Branching out into the more affordable R2 and R3 models is key to Rivian's long-term survival, opening up its product line to appeal to more than just those who can pay over $75,000 for a luxury vehicle. And to do this, it had to make some adjustments.

"To enable R2 to be launched earlier and with a considerable reduction in the capital required for its launch, Rivian plans to start production of R2 in its existing Normal, Illinois manufacturing facility," the company announced. It is also pausing construction in Georgia: "Rivian's Georgia plant remains an extremely important part of its strategy to scale production of R2 and R3. The timing for resuming construction is expected to be later to focus its teams on the capital-efficient launch of R2 in Normal, Illinois."

The move is expected to save the company $2.25 billion "as compared to the original forecast of launching the first line of R2 production at Rivian's Georgia site."

In October, the company announced that the Georgia site was "95 percent graded" and "nearly ready for construction to begin." Notably, under the incentive agreement, Georgia officials paid over $32 million for "clearing and grading" the site.

One year ago, almost to the day, Scaringe reaffirmed the company's dedication to the Georgia project, telling The Atlanta Journal-Constitution, "We're committed to this state and this project," adding that "the future of our company in terms of scaling and growing really relies on the future of this project. There's not another option. We're not planning an alternative. This must work."

The electric vehicle market, while growing, is in flux, due to softening consumer demand and persistently high interest rates. Just last month, Apple—the first company in history to ever record a $3 trillion valuation—canceled its decade-long quest to develop an electric car. General Motors and Ford have also rolled back pledged investments in electric vehicles.

In that sense, Rivian's pivot would be perfectly reasonable—companies must be free to adapt to changing circumstances in a way that benefits both their customers and their shareholders. But as with any central planning scheme, state economic incentives don't tend to allow for those sorts of dynamic pivots. In this case, Georgia officials mortgaged a large amount of taxpayer money on a plan that foresaw the company continuing on a path that no longer seems financially feasible.

The post Rivian Pauses Construction at Factory That Costs Georgia Taxpayers $1.5 Billion appeared first on Reason.com.