Texas governor and presidential candidate Rick Perry has been much in the news lately for comments on evolution and global warming that have appeared, to the glee of Democrats and the horror of not a few Republicans, to be “anti-science.”
But while Perry gobbles up ink and condemnation, the soft underbelly of different kind of denial by Democrats has became jarringly apparent today.
Yesterday, Solyndra, Inc., a California manufacturer of solar panels, announced that it was filing for bankruptcy.
The announcement is significant because Solyndra was the recipient of half a billion dollars in Energy Department loan guarantees under the Obama Stimulus program, and was the marque backdrop for the Obama administration in its quest to create a “green jobs” industry in the US.
The end of Solyndra means the immediate end of 1,100 jobs.
Solyndra’s collapse speaks volumes about the durable denial of Progressives regarding the limits of government in attempting to designate sustainable private sector growth.
It is with no small irony that Solyndra closed its doors three years and one day after then-candidate Obama spoke these words, accepting the Democratic nomination.
“And I’ll invest 150 billion dollars over the next decade in affordable, renewable sources of energy – wind power and solar power and the next generation of biofuels; an investment that will lead to new industries and five million new jobs that pay well and can’t ever be outsourced…” (emphasis added).
Well, apparently, not so much.
Don’t take my word for it. Just read Solyndra’s bankruptcy announcement.
“Solyndra could not achieve full-scale operations rapidly enough to compete in the near term with the resources of larger foreign manufacturers,” the company said. “This competitive challenge was exacerbated by a global oversupply of solar panels and a severe compression of prices that in part resulted from uncertainty in governmental incentive programs in Europe and the decline in credit markets that finance solar systems.”
Solyndra was done in by cheap Chinese production – something that was pointed out repeatedly as Energy guarantees were going through the approval process.
It wasn’t that Solyndra’s product wasn’t good. It was simply that Solyndra could not compete.
Indeed, Peter Lynch, a solar industry analyst spelled out Solyndra’s problem.
“You make something in a factory and its costs you $6, you sell it for $3 but you really need to sell it for $1.50 to be competitive. It was an insane business model. The numbers just don’t make sense and they never did.”
Solyndra was done in by something that Progressives and Democrats refuse to acknowledge; market forces.
In the real world, capital is a “free spirit”. It goes where it is welcomed, nurtured and where it can get the best return on investment.
But for Progressives, capital simply needs to do what its told.
To sit down and shut up.
But from contemplated revenue by taxing the “rich,” to dubious investments that attempt to create an industry from whole cloth, it never works out the way Progressive intend as their intention is at odds with the reality of the market.
Indeed, when you consider that Solyndra was based in California – where a 2009 report by the California Office of Planning and Research estimated the costs of regulation on business at half a trillion dollars – it becomes comic that Solyndra would ever be competitive on the global market, let a lone against the Chinese.
And Solyndra’s demise is not isolated.
Evergreen Solar, Inc., entered bankrutcy protection in August after closing a Massachusetts facility. And SpectraWatt, Inc., and Intel spin-off, filed for Chapter 11 after closing a New York factory.
Undeterred, and still apparently in denial, the Obama administration is pressing on.
“We’ve always recognized that not every one of the innovative companies supported by our loans and loan guarantees would succeed. But we can’t stop investing in game-changing technologies that are key to America’s leadership in the global economy,” said an Energy Department spokesman.
As if to augment the point, the White House stated yesterday that, “The Department of Energy’s overall portfolio of investments – which includes dozens of other companies – continues to perform well and is on pace to create thousands of new jobs.”
Indeed.
First Solar, Inc., one of the world’s largest manufacturers and developers of solar technology is receiving more than $5 billion in loan guarantees from the Department of Energy, and is operating well.
Of course, First Solar makes most of its products in Malaysia.
This is not a rap on clean tech. Developing alternate sources of energy is prudent.
But Progressives and Democrats fundamentally misunderstand the role of government as a driver for private sector innovation.
While it is true that whole new products and even industries have been created by government research and development, these have almost always been a bi-product of government action and not the goal. For instance, US innovations in defense, aerospace and space exploration were a catalyst for the revolution in micro-electronics computing power and IT that gave us the iPad and iPhone.
At the end of the day, it is not simply that Democratic hubris is leading us in the wrong direction. It is that it is costing us so dearly.
If you divide the Energy guarantee by the 1,100 jobs Solyndra just lost, the cost per job is $412,000, on the taxpayers dime.
Would private capital have allocated itself that way but for government intervention?
You don’t need Bill Gates or Steve Jobs to figure out the answer.