Tuesday, October 01, 2013

Against the bailout

Earlier in the year we learned that a combination of rogue management and government pillage had driven Solid Energy to the brink of bankruptcy. Today, the government announced its "solution": a $155 million bailout. So they'll be throwing good money after bad. And for what? Coal is not a strategic resource, and there's no case for government ownership anymore. And given coal's role in climate change, this is not a company with any sort of future. It is a relic, whose time has passed. It should be left to fail.

But what about the jobs? Do the maths. $155 million over three years is ~$50 million a year, for a little over a thousand jobs. In other words, the government will be paying ~$50,000 a job. If it wants to do that, it could just pay people - or at the least, pay them to do something which wasn't environmentally destructive.