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Common Retirement Fund? Come On

by on September 29, 2010

Congratulations, taxpayer: you helped finance a bunch of companies that couldn’t secure private money.  Don’t expect dividends, as the surprise only goes so far.

The Buffalo News details a plan to make others rich by spending everyone else’s money as part of New York State’s High Peaks Seed Venture Fund.  At least now you know where all that cash spent on public pensions is going:

Fledgling companies in New York State often have trouble attracting investment at a critical step in their development — after they launch, but before they generate revenue.

Their beef is with reality.  Plenty of people with good ideas have difficulty getting money to enact them.  Sometimes, it doesn’t happen at all, which is unfair but unavoidable here on Existence Earth; other times, it just takes a bit longer to break through and find investments.  But why persevere and triumph when there’s a state government that’s out to alter actuality right now?

A new venture fund supported by a $15 million allocation from the state Common Retirement Fund aims to help fill that gap by bolstering early-and seed-stage companies.

State Comptroller Thomas P. DiNapoli announced the High Peaks Seed Venture Fund on Monday during a visit to Buffalo. The fund will help ensure that ideas generated within the state can come to fruition here, he said.

Imagine how many fine concepts would come to fruition here if not for the state income levy along with revoltingly high rates on property owners and goods and services purchasers.

But the comptroller would rather use tax receipts to ensure entrepreneurs can maintain cushiness.  Allowing the fear of failure or poverty to serve as motivation?  Not in this state:

“The seed venture fund will help New York state-based university researchers and other entrepreneurs transform their ideas into commercial products,” DiNapoli said.

“We would like to see even more of the great ideas that are out there, the great ideas being born in Buffalo, become a reality,” he said.

How about a plan to starve the Albany-based ogre that subsides on ripping off workers?  I want an allocation to promote the need for reducing allocations.  After all, there is big currency involved:

The new fund will likely pour $100,000 to $500,000 into a company as an initial investment. Musits said a likely scenario is that initial investments will be made in 25 companies; about two-thirds of them will probably hit their milestones and receive a second round of financing.

To date, about $480 million has been invested in 155 companies through the program. Of that total, about $41 million has been invested in 11 companies in Erie and Niagara counties.

Wait: whose $480 million?  Even though “State and local government employees are required to contribute 3 percent of gross earnings to the Retirement System for 10 years,” it’s in large part communally funded. Namely, much of the rest comes from those who are fortunate enough to find jobs in New York that don’t require working for New York.

Hopefully, those on the pension fund dole will become economically healthier than the pension fund itself.  Lawmakers already engage in financial legerdemain to make it appear the fund isn’t up a Hudson-sized creek. We’d be better off trusting roulette players and pawn shop owners with our cash.

The present system’s administrators never ask why promising companies have trouble finding support in the first place.  Maybe it’s because the state is taxed into the Stone Age in order to fund programs such as a $126 billion pension fund.

But who cares when there seems to be economic progress in progress?  The funding is such a swell idea that the News article didn’t bother to include quotes from a dissenter.

Of course, it’s unlikely a reporter or editor could have found someone opposed to jobs, investment, funding for companies, possible financial growth, kittens, giggling babies, little American flags, or freedom.  But maybe there is some grouch who feels that the level of state-based intervention itself explains why stories about companies finding funding are so rare.

The more reasonable option for the enterprises in question would be to convince someone behind a desk in a bank lobby to loan them enough to fuel their dreams.  If these are truly worthwhile investments, finding backers should be much easier than the actual project.  But it’s easier to beg from us.

Still, who would say no?  We can’t fault the concerns who receive shares for taking what’s available.  However, we can fault New York State for making it available.  A pension this indescribably unwieldy is the source of our woes.  It’s little comfort, but it explains why capital is scarce.

The investment doesn’t work even if it does: the state ultimately assumes risk without reaping any direct benefits.  They could claim they’re betting on the future of Empire State dreamers.

But it would be far less of a gamble to make state workers fund more of their pensions while allowing private sector participants to subsidize what they choose.  It would do more for the state than the present state-mandated shuffling ever will.

The only thing the present setup will ensure is continued high attendance at upcoming Tea Parties.  Such de facto government support for private startups embodies every notion that’s currently on the political outs.

The contempt is for good reason: public/private partnerships foster dependency, preferential treatment, redistribution, and the unwillingness to let people buy what they want with their own money.  You do remember buying things with your own money, don’t you?

Advocates of such pension investing will condescendingly lecture us on the free market’s shortfalls.  They’ll prattle on about the economy’s complexity while disregarding the rampant unemployment and comically large debt that uncannily seem to accompany such policies.

So, they may as well jump in the deep end.  Specifically, Albany should apply for any leftover stimulus grants to fund the funding.  We may as well try to make the nation an involuntary investor instead of just New Yorkers.

Will such handouts help?  Of course, failing to think big may have kept these companies from getting anywhere in the first place.  But Albany can always just suck up more income from taxpayers, so they’re not worried.  Only we should be.

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