There it goes again: The federal government has taken yet another stake in a publicly traded company. This time it’s EOS Energy Enterprises Inc.
We first introduced you to EOS last month with serious questions others have posed about its operations, particularly its ability to function as a going concern while already being propped up with federal and state (i.e. taxpayer) subsidies.
As the Post-Gazette reports the latest on EOS (a New Jersey company with battery manufacturing operations in Greater Pittsburgh and plans to move its headquarters to the North Side):
“The zinc-based battery manufacturer, whose main factory is in Turtle Creek, said [Nov 18] that it signed an agreement with the U.S. Department of Energy to issue the government warrants — vouchers to buy stock — for 570,000 shares. The Department of Energy (DOE) can exercise the warrants anytime in the next five years and convert them into stock at a penny a piece. EOS’ current stock price is $13.48 a share. …
“The company expects the market for long-duration — up to 12 hours — battery storage to grow rapidly in the coming years. EOS executives tout a pipeline of orders totaling $644.4 million, of which 22 percent represents data center projects, according to the company’s latest earnings statement released in October.”
Well, if the outlook is so rosy, risk your own capital, EOS.
By the way, EOS, has already tapped into taxpayer largess in a major fashion with a $300 million-plus federal government loan and a combined pledge of $24 million from Pennsylvania and Allegheny County.
But, simply put, the bottom line is that government has no business being any kind of shareholder in any company. And that’s whether its Nippon-U.S. Steel, Westinghouse or anybody else.
As the Nippon-U.S. Steel government “deal” already has shown, such line-crossing comes with it government interference in a company’s ability to adjust to market forces, part and parcel to any company’s success.
It borders on nationalizing large sectors of America’s manufacturing sector in the hubristic pursuit of a national industrial policy.
Attempts at “planned” economies are shortsighted recklessness. They either will fail outright or, over time and, in the process, improperly redirect scarce resources from properly pursued market-based endeavors.
After all, government has a sad, sad record of picking losers.
All the while, such attempts will leave taxpayers, who have no business being turned into venture capitalists, holding the bag for hundreds of millions in bad debts.
As The Wall Street Journal’s Andy Kessler reminded recently:
“Nationalization is against the American capitalist spirit which thrives on competition. Why? Because profit motives go away and inevitable price controls lead to stagnation.”
Let’s call it what it is: Government power-grabbing insanity. No good ever comes from it. And it must stop.
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
