A123 Files for Bankruptcy
Yet another failure of central planning
Electric car battery-maker A123 Systems has filed for bankruptcy, according to Bloomberg News.
The company was promoted heavily by President Barack Obama and Michigan politicians and received hundreds of millions of dollars through federal “stimulus” and Michigan Economic Development Corp. programs. Earlier this year, Michigan Capitol Confidential uncovered a video of these politicians promising “hundreds” and “thousands” of jobs – the video was eventually taken down by the MEDC but saved by CapCon.
Despite known financial trouble, just a few months ago A123 awarded sweetened severance packages to its top executives. From CapCon:
Vice President and General Manager of Energy Solutions Group Robert Johnson, for example, would see his severance increase an extra $200,000 from the agreement, boosting it from $400,000 to $600,000. Johnson’s base salary is $400,000 this year, up 21 percent from his 2011 base salary of $331,250. That raise is consistent with a pattern of large pay increases top executives at A123 Systems have received.
In sum: The president of the United States, Michigan’s former governor, the state’s two U.S. senators and the U.S. Secretary of Energy promised thousands of jobs from a company that in a mere two years went bankrupt. Despite a bankruptcy or buyout predicted by outside observers, the company continued to reward its top executives while laying off most of its workforce.
Taxpayers should not be surprised: This is only the latest example where political calculations trumped market ones. Only government bureaucrats spending other people’s money would think this was a good investment.
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.